(1) As of December 31, 2021
Our Team
We have assembled an outstanding management team with relevant scientific, clinical and regulatory expertise. Our scientific founders, Dr. Jean-Marie Lehn, Dr. Claude Nicolau, and Dr. Fred van Leuven, are regarded as
pioneers in their respective scientific domains, including in the study of AD. Our co-founder and Chief Executive Officer, Dr. Andrea Pfeifer, a Pharmacologist with a Ph.D. in cancer research and a former National Institute of Health researcher,
has a 30-year track record in product innovation and implementation, and was formerly Head of Nestlé Global Research and the co-founder of Nestlé Venture Fund. Dr. Marie Kosco-Vilbois, our Chief Scientific Officer, brings more than 20 years of
experience in various aspects of discovery research and drug development, including work on multiple drug development programs. Prof. Johannes Rolf Streffer joined AC Immune in 2021 as our Chief Medical Officer. Prof. Streffer is a Neurologist and
Psychiatrist with extensive expertise in AD including biomolecular modalities such as PET, volumetric and functional MRI, genetics, cognition and cerebrospinal fluid (CSF) marker.
Unmet need in neurodegenerative diseases
Figure 2: Neurodegenerative diseases represent a large and growing market
(1) Alzheimer’s Disease International; (2) Parkinson’s disease; (3) Michael J. Fox Foundation; (4) Limbic-predominant age-related TDP-43 encephalopathy; (5) Nelson PT et al., Brain 2019; (6) National Institute of Neurological Disorders and Stroke
Neurodegenerative diseases, including dementias and other diseases associated with protein misfolding, are prevalent, but there is currently an absence of reliable, early-stage diagnosis and disease-modifying
treatments for these diseases. The growth in the number of people with neurodegenerative diseases has been significant, as evidenced by the prevalence of people affected by AD and PD, two of the most common neurodegenerative diseases.
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The World Health Organization recognizes dementia as a global public health priority. Worldwide, there is a new case of dementia every 3 seconds, with an estimated global patient population of
greater than 50 million in 2020. This is predicted to increase to 139 million by 2050 (Alzheimer’s Disease International).
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The estimated total healthcare costs for the treatment of Alzheimer disease in the United States in 2021 is estimated to be USD 355 billion per the Alzheimer’s Association, with the worldwide cost for dementia expected to increase to
approximately USD 2.8 trillion annually by 2050 as the population ages. In fact, if the estimated global costs of dementia were a country, it would be the 14th
largest economy in the world.
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Current diagnostic and treatment paradigms for neurodegenerative diseases are suboptimal. Diagnosis typically takes the form of observation of cognitive, functional and behavioral impairment and
other symptoms of the diseases, which are generally only apparent after irreversible neuronal damage has already occurred. Until 2021, there were five approved therapies for AD, all of which provided only modest efficacy in treating the symptoms of
the disease while having significant side effect risks and failing to address the progression of the disease. Despite these shortcomings, marketed therapies, such as Eisai and Pfizer’s Aricept, have achieved peak annual global sales of
approximately USD 4 billion prior to loss of exclusivity. Similarly, in the treatment of PD, the current standard of care is intended only to alleviate physical symptoms.
On June 7, 2021, the U.S. Food and Drug Administration (FDA) granted accelerated approval of Biogen’s anti-Abeta monoclonal antibody, aducanumab, for the treatment of Alzheimer’s disease (AD),
making it the first FDA-approved, potentially disease-modifying therapy addressing this high unmet medical need. The FDA based its decision to approve aducanumab on the reduction of Abeta plaques in the brain as a surrogate endpoint. Biogen will
need to complete a large clinical trial to confirm that removing Abeta plaque has clinical benefits on cognition and function.
On January 11, 2022, CMS released a proposed National Coverage Determination decision memorandum: stating it would cover FDA-approved monoclonal antibodies (including ADUHELM) that target
amyloid for the treatment of Alzheimer’s disease solely for people enrolled in qualifying clinical trials. A final decision is expected in April 2022.
Neurodegenerative disease overview
Folding and unfolding of proteins are important ways of regulating the biological activity and cellular location of those proteins. Misfolding of proteins occurs due to a breakdown of cellular quality control systems
and is a common feature of many neurodegenerative diseases. Misfolded proteins are unable to carry out their normal functions and aggregate to form insoluble deposits in the brain, which eventually lead to neuronal damage and cell death. The
progression of neurodegenerative diseases, such as AD and PD, is linked to the spread of misfolded, pathological protein aggregates throughout the brain. Figure 3 shows how misfolded proteins play a key role in the pathology of neurodegenerative
diseases.
Figure 3: Misfolded proteins key impact on the pathology of neurodegenerative diseases
Typically, protein misfolding occurs in response to cellular stress, which can be triggered by many different, largely unknown, causes. A cascade of molecular events begins with the misfolding of single proteins within
a cell, which then aggregate and ultimately form larger aggregates including plaques and tangles. These misfolded proteins are then exported or shed from dying neurons where they can spread to healthy cells nearby. Once inside, misfolded proteins
can interact with normal proteins and cause them to misfold in a process known as “seeding,” leading to spreading of the disease pathology throughout the brain, increased neuronal death and a progressive decline in cognitive function.
Figure 3 also shows how our therapies are designed to intervene and prevent key pathological steps in the progression of neurodegenerative diseases. They are designed to (i) prevent initial misfolding; (ii) promote
disaggregation of misfolded proteins; (iii) inhibit spreading of pathological protein to healthy cells; (iv) prevent seeding of new misfolded protein aggregates inside healthy cells; and (v) inhibit downstream neurodegeneration. This robust
approach to targeting neurodegenerative diseases is enabled by our two validated technology platforms, SupraAntigen and Morphomer, which generate highly specific biologics and small molecule inhibitors that can distinguish normal from misfolded
proteins and inhibit key disease pathways both inside and outside of cells.
Our strategic vision
Our goal is to continue leveraging our proprietary discovery platforms, SupraAntigen and Morphomer, to become a global leader in precision medicine for the diagnosis and treatment of neurodegenerative diseases. We are
executing a clear business strategy built on three pillars: (i) accelerate development of novel therapeutics in AD with our partners; (ii) expand our strategic focus in Parkinson’ disease (PD) and non-AD neurodegenerative diseases, including
NeuroOrphan indications and limbic-predominant age-related TDP-43 encephalopathy (LATE); and (iii) a continued focus on diagnostics enabling precision medicine to be an ultimate differentiator for the Company.
Figure 4: AC Immune’s three-pillar strategy
(1) Parkinson’s disease; (2) Down syndrome; (3) Neurodegenerative diseases; (4) Multiple system atrophy; (5) TAR DNA-binding protein 43
Our three-pillar execution strategy reflects our unique precision medicine approach, which ultimately creates differentiation due to our ability to address the high levels of co-pathologies present in AD and other
neurodegenerative diseases. Much like cancer, neurodegenerative diseases are heterogeneous and may require multiple therapeutic interventions tailored to patients’ specific disease drivers, to be used in concert in order to slow or stop the disease
course. Ultimately, it is our belief that precision medicine will increase the chance of treatment success by enabling clinical trial participants to be better defined by their various proteinopathies, affording treatment with the right therapies
at the right time.
AC Immune has established itself as a leader in developing precision medicines for neurodegenerative diseases by utilizing our diagnostic capabilities to enable improved diagnosis of
co-pathologies, patient selection and assessment of clinical trial outcomes. Our dual technology platforms allow for a multi-modal approach encompassing a portfolio of vaccines, antibodies and small molecules tailored to the underlying pathology
driving patients’ disease. In addition to generating targeted monotherapies, this approach creates the potential for combination regimens, which may treat a broader spectrum of disease and offer greater efficacy.
AC Immune’s Roadmap to Successful Therapies for Neurodegenerative Diseases
Precision medicine is a key element of our six-point framework for developing successful therapies in neurodegenerative diseases, building on one of the broadest pipelines in the field.
Figure 5: AC Immune’s roadmap to successful therapies for neurodegenerative diseases
(1) Reardon S, Nature 2018; (2) Pontecorvo MJ, et al., Brain 2019; (3) Gordon BA, et al., Brain 2019; (4) Positron emission tomography; (5) Strydom A, et al., Alzheimer’s Dement (NY) 2018;
(6) Lott IT and Head E.,Nat Rev Neurol. 2019; (7) Down syndrome-related Alzheimer’s disease; (8) TAR DNA-binding protein 43; (9) Robinson JL, et al., Brain 2018; (10) Heneka MT et al., Nat Rev Neurosci. 2018; (11) Wang S
et al., Int Immunopharmacol. 2019; (12) Monoclonal antibody; (13) Small molecule; (14) NOD-like receptor protein 3; (15) Apoptosis-associated speck-like protein containing a CARD, also PYCARD
Treat earlier
Identifying patients at risk or in early stages of disease when pathological burden is low and neuronal health is preserved offers the best chance of intercepting pathological spread in neurodegenerative diseases. For
example, it is now believed that treatments targeting beta-amyloid (Abeta) may be most effective before symptoms become apparent. The Alzheimer’s Prevention Initiative (API) trial of crenezumab aims to answer this fundamental question.
Target Tau
Tau plays a very important role in neurodegeneration. Understanding whether the aggregation and spreading of pathological Tau throughout the brain can be stopped by therapies targeting Tau is a critical question that
we are examining. This is being addressed through AC Immune’s multiple Tau research programs in early and late-stage diseases.
More homogeneous populations
Multiple pathologies are thought to contribute to the development of AD, including genetic, lifestyle and environmental factors. To understand if a candidate drug has therapeutic potential, it is important to first
engage more genetically homogeneous patient populations to minimize variability with respect to pathophysiology. We are developing these efforts with our prevention studies in genetically defined populations such as familial AD and DS-related AD.
Precision medicine
Building on the understanding that multiple pathologies contribute to AD, there is a need to accurately diagnose and target the underlying pathology. We are developing an integrated diagnostic and therapeutic strategy
to deliver, for the first time, precision medicine for patients with neurodegenerative conditions.
Target neuroinflammation
It is well established that microglia maintain a healthy brain environment by clearing debris, including misfolded and aggregated Abeta, Tau and alpha-synuclein (a-syn). Chronic hyper-stimulation of microglial cells by
these protein aggregates is now emerging as a hallmark of AD – and potentially all neurodegenerative diseases – that leads to unwanted inflammation and further damage to brain cells. We focus on the NOD-like receptor pyrin domain-containing protein
3 (NLRP3) inflammasome pathway, based on emerging evidence showing its particular relevance for neurodegenerative diseases.
Non-AD indications
We are also broadening our strategic activity in other neurodegenerative diseases such as Parkinson’s disease and frontotemporal dementia with the genetic microtubule-associated protein tau (MAPT) mutation – a
NeuroOrphan disease we aim to address with our Morphomer Tau small molecule aggregation inhibitors. Finally, we will also continue to advance our suite of potentially best-in-class diagnostics, particularly those for Parkinson’s disease and
TDP-43-based pathologies.
Key elements of our approach include:
1. Execution on advancing our product candidates, in partnership or alone, from clinical development to regulatory
approval and potential commercialization
Figure 6: Our broad and robust clinical stage pipeline
(1) Alzheimer’s disease; (2) Open label extension study is ongoing; (3) Positron emission tomography; (4) Progressive supranuclear palsy; (5) Prevention
trial API-ADAD in Colombia; (6) Down syndrome-related Alzheimer’s disease; (7) alphasynuclein; (8) Parkinson’s disease; (9) Multiple system atrophy
Our clinical stage product candidates include:
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ACI-35.030. Janssen and AC Immune are evaluating the anti-phosphorylated-Tau (anti-pTau) vaccine candidate ACI-35.030 in a Phase 1b/2a
study in subjects with early AD. Interim results show that ACI-35.030 vaccination generated a strong antigen-specific antibody response against pTau in 100% of participants, achieving anti-pTau antibody levels of about two orders of
magnitude higher than pre-vaccination levels, whereas anti-ePHF (enriched paired helical filaments) antibody titers increased by one order of magnitude from baseline as early as two weeks after the second injection at week 8 of the mid-dose
of ACI-35.030. No clinically relevant safety concerns related to the vaccine candidate were observed. Based on these results, the second highest dose cohort was expanded in Q2 2021 to facilitate plans for further late-stage development.
ACI-35.030 specifically targets pathological pTau species and is eventually intended as a disease-modifying treatment for AD and other Tauopathies.
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ACI-24 for AD. A first Phase 1/2 study was completed and finalized in 2019. The subsequent Phase 2 study in AD assessed the safety, tolerability, immunogenicity and target
engagement of ACI-24 using intramuscular immunizations and analyzed the effects of ACI-24 on brain amyloid as assessed by PET imaging. This trial was completed and finalized in November 2021. ACI-24 was safe and well tolerated and triggered
a clear IgM response with lower Abeta-specific IgG titers. While no apparent effect in amyloid-PET was observed in this limited study population, there was evidence of a pharmacodynamic effect observed by an increase of CSF Aβ1-40 and
Aβ1-42 levels compared to the placebo, thus suggesting target engagement. These results support the clinical development of the optimized formulation of ACI-24 (i.e. ACI-24.060) with Abeta unrelated T-helper cell epitopes to increase the
magnitude and the boost-ability of the antibody response.
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ACI-24 for DS. Our Phase 1b clinical study of ACI-24 for individuals with DS, intended to assess safety, tolerability and immunogenicity at two doses, was completed and results
reported in Q1 2021. The results support a favorable safety and tolerability profile of ACI-24 and show a pharmacodynamic response in this vulnerable patient population and the advancement of this program with the optimized formulation of
ACI-24. The Clinical Trial Application (CTA) for the next study evaluating the optimized formulation of ACI-24 in AD and Down syndrome populations was submitted in Q4 2021. The trial initiation is planned in H1 2022.
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ACI-7104. ACI-7104, the optimized formulation of the clinically-validated PD vaccine candidate PD01, will advance into an adaptive, biomarker-based Phase 2 study. This trial will evaluate an
initial dose-response of the optimized formulation focusing on immunogenicity against a-syn and pathological a-syn species. Additionally, the identification or verification of disease-specific biomarkers and progression of motor and
non-motor symptoms of Parkinson’s disease will be monitored, together with digital, imaging and fluid biomarkers, in the second part of the study. The trial initiation is planned in H2 2022.
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Semorinemab. Our collaboration partner, Genentech, a member of the Roche Group, completed a
first Phase 2 study (Tauriel) conducted in patients with prodromal-to-mild AD in Q3 2020. This trial did not meet its primary efficacy endpoint of reducing decline on Clinical Dementia Rating-Sum of Boxes
(CDR-SB) compared to placebo; the primary safety endpoint was met. A second Phase 2 study (Lauriet) conducted in patients with mild-to-moderate AD was completed in Q3 2021 and top-line data from showed a statistically significant
reduction on one of two co-primary endpoints, ADAS-Cog11. The second co-primary endpoint, ADCS-ADL, and secondary endpoints were not met. Safety data showed that semorinemab is well tolerated with no unanticipated safety signals. Genentech
reported that the open label portion of the study will continue as planned and that further analyses are ongoing. Semorinemab is designed to slow the prion-like propagation of Tau pathology, which coincides with both clinical symptoms and
disease progression in AD.
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Crenezumab. Roche announced in 2019 the discontinuation of the Phase 3 clinical trials in AD but is continuing in a landmark prevention trial in Colombia, in a population of
genetically predisposed people at risk of developing familial AD. The overall beneficial safety profile was confirmed in the CREAD studies, supporting use of crenezumab in healthy individuals with risk of developing AD. Top-line results
from this Phase 2 Prevention trial are expected in H1 2022.
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Morphomer Tau aggregation inhibitors. In collaboration with our partner, Lilly, we are researching and developing small molecule Tau aggregation inhibitors with plans to
evaluate candidates in AD and NeuroOrphan indications. We completed a Phase 1 clinical study in healthy volunteers with ACI-3024, in Q2 2020, which showed a dose-dependent exposure and brain penetration, achieving the desired levels of
ACI-3024 in the CSF. In addition to AD, the program was expanded to NeuroOrphan indications and ACI-3024 will be further evaluated for efficacy in models of rare Tauopathies. Continued candidate characterization across the research program
has also identified new and highly differentiated candidates with excellent cerebrospinal fluid exposure and selectivity for pathological aggregated Tau. These will be broadly developed in Tau-dependent neurodegenerative diseases.
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Tau-PET tracer. PI-2620 is our Tau-PET imaging agent. We are working with our partner, LMI, to advance PI-2620 as a highly differentiated, best-in-class Tau diagnostic for AD
as well as non-AD Tauopathies such as progressive supranuclear palsy (PSP) and corticobasal degeneration (CBD). Results have demonstrated PI-2620’s differentiated characteristics as a diagnostic tool for studying Tau-related diseases.
PI-2620 completed a Phase 2 clinical trial in AD in Q4 2021.
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A study published in Movement Disorders indicated a value of PI-2620 for evaluating corticobasal syndrome, providing quantitatively and regionally distinct signals in beta-amyloid-positive as well as
beta-amyloid-negative corticobasal syndrome. Further, results demonstrated PI-2620’s excellent characteristics as a diagnostic tool for studying Tau-related diseases following a recent publication (J Cereb Blood Flow Metab) that PI-2620 binding
characteristics in cortical regions differentiated between 3/4R- and 4R-tauopathies and might serve as a supportive readout in the diagnostic workup of neurodegenerative disorders. Two test-retest studies in PSP (Phase 1) are open and recruiting
with results anticipated in H2 2022.
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A-syn-PET tracer. Our next-generation PET imaging tracer, derived from our Morphomer platform, has shown significant potential to reliably detect and map deposits of
pathological alpha-synuclein protein in the brain. Supported by the Michael J. Fox Foundation for Parkinson’s Research (MJFF), a first-in-human study and an investigator-initiated study of our latest diagnostic agent targeting a-syn were
initiated in Q1 and Q3 2021, respectively. The readouts of these trials in patients with PD, multiple system atrophy (MSA) and other synucleinopathies are anticipated by Q2 2022.
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2. Expand product development into NeuroOrphan and additional neurodegenerative diseases
Beyond AD, we aim to pursue additional neurodegenerative diseases such as Parkinson’s disease (PD) and NeuroOrphan indications, specifically Tau-, a-syn- and TDP-43-driven diseases, such as
FTLD-Tau (e.g., PSP, CBD, FTLD-MAPT), MSA, and ALS and FTLD-TDP, respectively. As part of this planned strategic move, AC Immune acquired certain a-syn assets from Affiris in 2021, gaining an advanced, clinical stage and validated a-syn vaccine
candidate for development against PD in the process.
Pursuing NeuroOrphan indications may enable us to obtain a streamlined regulatory approval pathway and favorable reimbursement for any approved products. In addition, we are accelerating our novel
therapeutic and diagnostic candidates targeting a-syn as a primary pathology in Parkinson’s disease and other a-synucleinopathies. See below for a summary of our early-stage diversified novel targets pipeline including non-AD neurodegenerative
diseases, with an in-house focus on NeuroOrphan indications.
Figure 7: Robust novel targets pipeline: diversification into non-AD and non-CNS diseases
(1) Parkinson’s disease; (2) TAR DNA-binding protein 43; (3) Limbic-predominant age-related TDP-43 encephalopathy; (4) Positron emission tomography; (5) NOD‑like receptor protein 3; (6) Apoptosis-associated speck-like protein containing a CARD,
also PYCARD
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Accelerating the advancement of our diagnostic portfolio
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Early detection of neurodegenerative diseases may be critical to enhancing the effectiveness of both symptomatic and disease-modifying therapies. As a result, therapeutic development for AD increasingly focuses on
treating early-stage disease to delay or prevent progression and to preserve the maximum amount of cognitive function before it is irreversibly lost. Most clinical studies now target mild or even preclinical stages of the disease increasing the
need for accurate diagnosis that is independent of potentially subjective cognitive metrics. At least one study estimates that as many as one-third of patients in previous AD studies did not in fact have AD. Accurate and early diagnosis of AD is
thus a substantial unmet market need, and diagnostic products will have a key role in generating a new treatment paradigm, including by selecting more uniform and stage-specific clinical study subjects, tracking patient progress and results,
managing patients who are receiving treatment, and ultimately diagnosing disease at its earliest stage for immediate treatment.
Figure 8: The need for precision medicine in AD: improved clinical trials, diagnosis and treatment of neurodegenerative diseases
(1) Alzheimer’s disease; (2) Neurodegenerative diseases; (3) TAR DNA-binding protein 43; (4) Alpha-synuclein; (5) Intermediate level of Alzheimer’s disease neuropathological change; (6) High level of Alzheimer’s disease neuropathological change
Ref: Adapted from Robinson et al., Brain, 2018
We are developing a suite of companion diagnostics designed to be first-in-class or best-in-class, which will enable improved diagnosis of co-pathologies, patient selection and assessment of clinical trial outcomes. We
currently have four diagnostic programs in our pipeline, developed using our proprietary technology platforms and targeting the therapeutic targets: Tau, a-syn and TDP-43.
Leveraging our Morphomer platform, we are also developing proprietary PET imaging diagnostics for diseases resulting from the misfolding of a-syn and TDP-43 proteins. No such diagnostics are currently available for
these important pathologies and AC Immune has identified promising compounds with high affinity and target specificity, as well as favorable central nervous system (CNS) pharmacokinetic properties. In 2020, the a-syn-PET tracer won the Ken Griffin
Alpha-synuclein Imaging Competition from The Michael J. Fox Foundation for Parkinson’s Research. Our novel TDP-43-PET tracer and our antibody-based immuno-assay for biofluid detection of TDP-43 also were awarded highly competitive grants from the
EU Joint Programme – Neurodegenerative Disease Research’ (JPND) and The Target ALS Foundation, respectively, in 2020. Our diagnostics for a-syn and TDP-43, if validated clinically, could become the first in the world to effectively diagnose these
proteinopathies, which are highly relevant for multiple neurodegenerative diseases.
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Continuing to optimize our long-term growth by selectively partnering product candidates for global development and commercialization
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We have a strong track record of establishing value-driving collaboration agreements with leading pharmaceutical companies, including two collaborations with Genentech, one with Janssen and one with Lilly. This
strategy allows us to leverage our partners’ scientific, development, manufacturing and commercialization expertise and other resources while partially monetizing our investments, de-risking and accelerating the development of our product
candidates. This strategy also enables us to use non-dilutive partnership revenue to bolster our investment into our early-stage proprietary programs and fuel our continued growth. We have five current collaboration agreements with leading global
pharmaceutical companies, summarized in the table below:
Figure 9: External validation and cash generation through external collaborations1
(1) Disclosure limited due to confidentiality agreements with collaboration partners; (2) in millions; (3) Positron emission tomography; (4) Phase 1 completed; (5) Equity investment; (6) Converted to CHF on date of receipt; (7) Excludes
convertible note agreement of USD 50 million
For any additional product candidates targeting large markets, we may, if appropriate, selectively partner with leading companies that we believe can contribute development, manufacturing and marketing expertise,
geographic reach and/or other resources that can enhance the value of our wholly-owned products. We will continue to seek to retain certain indications (e.g., NeuroOrphan) and/or geographies, such that we can begin to grow our own marketing
capabilities as we develop AC Immune into a fully integrated pharmaceutical company.
Additionally, in this respect, we established a strategic partnership with WuXi Biologics for its expertise in manufacturing biologicals in China and potential collaborations regarding AC Immune’s SupraAntigen
platform.
The benefits of our clinically-validated, proprietary technology platforms
The engines that drive our growth are our two unique proprietary and versatile technology platforms: our SupraAntigen platform, which is our biological and immunological platform, and our Morphomer platform, which is
our chemical platform. These platforms generate biologics (vaccines and antibodies) and small molecules, respectively, which are designed to selectively interact with the misfolded proteins that are common in a broad range of neurodegenerative
diseases. These clinically-validated platforms form the basis of our ongoing pipeline development and the value-driving strategic partnerships we have established to date.
The key aspect of both our SupraAntigen and Morphomer technology platforms is conformational specificity, which we believe is central to the development of effective and safe therapeutics for neurodegenerative
diseases. Our SupraAntigen platform targets misfolded proteins through antigens displayed on the surface of liposomes, which mimic the targeted pathological form of the protein. In a complementary approach, our Morphomer platform uses small
molecular weight compounds to target the aggregation and seeding process, which prevents the misfolded proteins from aggregating inside the cell and prevents the formation of new misfolded proteins in healthy neighboring cells through a seeding
mechanism. Small molecules derived from our Morphomer platform, which we refer to as Morphomers, not only inhibit aggregation of pathological proteins, but also promote disaggregation of already formed aggregates, thereby potentially enhancing
their therapeutic potential even in established disease states.
Figure 10: Morphomer and SupraAntigen platforms: an integrated approach to CNS1-specific therapies
(1) Central nervous system; (2) Blood-brain barrier; (3) Positron emission tomography
The SupraAntigen platform was first developed by AC Immune’s scientific co-founders to overcome a challenge common to neurodegenerative diseases: the lack of immunogenicity of disease-causing self-proteins. The
SupraAntigen platform uses liposomes (small spherical vesicles formed by a lipid bilayer) to present specific antigens designed to evoke an immune response. SupraAntigen is used to generate conformation-specific antibodies for immunotherapy in
neurodegenerative diseases. The overarching idea behind the platform is that antibodies, which are large in size, are well-suited to target extracellular proteins, interrupt spreading of pathological proteins, and break up and clear aggregates of
misfolded proteins through phagocytosis.
AC Immune has acquired advanced mastery of the design and manipulation of liposomes to develop either passive or active immunization techniques to generate antibodies targeting neurodegenerative diseases. When pursuing
active immunization approaches, we use liposomes carrying a specific antigen as a vaccine. After vaccination with a liposome, antigen and confirmation-specific antibodies are produced naturally by the host with very high affinity without further
optimization. This immune response can be long-lasting and may be ideal to prevent the onset of a disease, as the immune system is now primed to rapidly identify disease-causing misfolded proteins.
Product candidates generated utilizing the SupraAntigen platform include vaccines ACI-35 in Phase 1b/2a for AD and ACI-24 in Phase 2 for AD and Phase 1b for DS, as well as the antibody crenezumab in Phase 2 for AD and
the preclinical candidates targeting a-syn and TDP-43 for PD and NeuroOrphan indications.
The Morphomer platform is designed to enable the development of small molecules (Morphomers) able to bind/interact with beta-sheets containing fibrillary aggregates from candidate selection through preclinical
proof-of-concept. Morphomers can target pathological protein aggregates in any brain compartment and are equally well suited for therapeutic and diagnostic applications.
The first key component of the Morphomer platform is its library of rationally designed, CNS-optimized non-dye compounds. AC Immune’s extensive know-how has enabled the identification of CNS compounds that penetrate
the brain and demonstrate high selectivity for the target. This knowledge has been used to focus the Morphomer library to approximately 15,000 compounds that display these favorable characteristics, making this library an ideal starting point when
developing molecules to target human proteinopathies of the CNS. Thus, rather than using the non-directed trial and error strategy of the typical drug development process, the Morphomer platform utilizes its bias for successful CNS candidates to
improve efficiency and accelerate the early stages of the drug development process. Extensive expertise in medicinal chemistry and a suite of proprietary assays developed to screen and validate candidate compounds enables AC Immune to rapidly
optimize multiple, highly diversified lead compounds for further preclinical and clinical development.
Therapeutic product candidates generated by the Morphomer platform include our lead Morphomer Tau candidates, Morphomer a-syn in PD (preclinical stage) and the diagnostic programs PI-2620 in Phase 2 and Phase 1 in AD
and PSP, respectively, and a-syn-PET in Phase 1 clinical trial in PD, MSA and other synucleinopathies and TDP-43-PET imaging agents in the preclinical stage.
Shifting the current treatment paradigm for neurodegenerative diseases
Modifying the progression of the disease requires targeting the specific underlying biological processes that drive disease progression. Unfortunately, these processes evolve over the course of many years prior to
manifestation of symptoms and a high percentage of neurons may be lost prior to clinical manifestation. Earlier intervention or prevention of the disease could have a major impact, but it requires accurate disease detection prior to developing
symptoms. Due to recent advancement in biomarker research, people at risk of developing AD can be diagnosed 10-20 years before symptoms occur, opening a completely new market segment for the prevention of NDD when active vaccination will play an
important role. This early, and potentially preventative, precision medicine approach may ultimately lead to better disease management for patients with neurodegenerative diseases.
Figure 11: Treatment and diagnosis of AD
Due to the high level of co-pathologies involved in neurodegenerative diseases, future treatment paradigms may involve different combinations of disease modifiers at various stages of a disease. Therefore, combination
therapies may include combinations of immunotherapies or combinations of small and large molecules targeting proteinopathies and neuroinflammation. Our therapeutic product candidates seek to modify the course of AD by intervening at an earlier
stage of the disease progression, prior to irreversible neuronal damage. Beyond AD, we believe that we can leverage our proprietary platforms to generate and employ molecules that address the pathologies of other neurodegenerative diseases (Figure
12).
Figure 12: Market opportunities targeting key primary and co-pathologies
(1) Alzheimer’s Association; (2) (NOD)-like receptor protein; (3) Apoptosis-associated speck-like protein containing a CARD, also PYCARD; (4) GBD 2016
Parkinson’s Disease Collaborators Lancet Neurology 2018; (5) Limbic-predominant age-related TDP-43 encephalopathy; (6) Nelson et. al. Brain 2019; (7) TAR DNA-binding protein 43; (8) National Institute of Neurological Disorders and Stroke (NINDS)
Progressive Supranuclear Palsy Fact Sheet; (9) NINDS Multiple System Atrophy Fact Sheer; (10) ALS Association Rare Disease 2013; (11) NINDS Amyotrophic Lateral Sclerosis Fact Sheer; (12) Knopman and Roberts J. Mol. Neurosci. 2011
In support of shifting the current treatment paradigm from treatment to prevention, we are the leader in discovering new PET imaging agents to improve the timing and accuracy of diagnoses in neurodegenerative diseases.
In our pipeline, we have three families of diagnostic candidates that were developed through our Morphomer platform, which target Tau, a-syn and TDP-43. We believe our Tau-PET imaging program has received external validation through our partnership
with LMI, a leader in imaging agents. We are also developing a-syn and TDP-43 PET imaging agents for PD and other neurodegenerative diseases.
With our unique integrated approach focused on precision medicine, we believe that our diagnostic product candidate pipeline will complement our disease-modifying treatment product candidate pipeline and potentially
reshape the clinical course and treatment of neurodegenerative diseases.
Our clinical programs
Anti-pTau vaccine
In collaboration with Janssen, we are advancing an anti-pTau vaccine program directed against a key component of the pathology of AD: phosphorylated Tau proteins, found in Tau tangles. Developed using our SupraAntigen
technology, our vaccine is designed to stimulate a patient’s immune system to produce antibodies against misfolded and phosphorylated, pathological Tau protein, which aggregate to create the neurofibrillary tangles that characterize AD.
Advantages of Tau vaccination over other therapeutic approaches
Tau vaccines which are able to induce a long-lasting and boost-able antibody response have the potential to be even more advantageous than other anti-Tau therapeutic modalities such as small molecules or monoclonal
antibodies, which typically show much shorter half-lives in vivo, requiring more frequent administration. Tau vaccines such as ACI-35.030 may thus offer a more cost effective, and less invasive approach for
the treatment or prevention of Tau pathology, which may be particularly relevant for addressing slow-progressing chronic neurodegenerative Tauopathies such as AD.
ACI-35
ACI-35 is an initial formulation liposomal anti-pTau active investigational vaccine designed to elicit antibodies against extracellular pTau protein in order to prevent and reduce the spread and development of Tau
pathology within the brain. In preclinical testing, the vaccine candidate induced an antibody response that was highly specific to phosphorylated Tau. This antibody response resulted in a significant reduction of pTau and in animal disease model.
ACI-35 was the first vaccine candidate against pathological pTau to be tested in a clinical study involving patients with mild-to-moderate AD. The Phase 1b study was completed in June 2017.
Mechanism of action
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ACI-35 is composed of a human pTau synthetic peptide T3 as the antigen, derived from Tau sequence 393-408 and phosphorylated at serine residues S396 and S404. Lipidation of the peptide enables it to embed itself into the lipid bi-layer
of the liposome and confers a specific conformation to the peptide (Theunis et al., PLoS ONE 2013).
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In wild-type and transgenic mice, immunization with ACI-35 generated a specific antibody response to phosphorylated vs. non-phosphorylated Tau protein (Vukicevic et. al. AAT-AD/PD 2020).
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In transgenic mice, immunization with ACI-35 led to a significant decrease of soluble and insoluble total Tau protein and insoluble pTau species in brain (Figure 13).
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Figure 13: Immunization of hTauP301L mice leads to a reduction of the levels of pS396 and HT7 in the Sarkosyl insoluble Tau fraction of the forebrain of Tau.P301L mice
Ref: Theunis et al., PLoS ONE 2013
Clinical development
Phase 1b study design
The safety, tolerability and immunogenicity of ACI-35 were tested in a Phase 1b study in participants with mild-to-moderate AD. It was a randomized, placebo-controlled, double-blind study. Different dosages and dosing
schedules were investigated in an ascending dose design. Multiple injections of ACI-35 were administered per cohort for active or placebo treatment in a three-to-one ratio.
Safety
The ACI-35 vaccine was considered to be safe and well tolerated with no events related to CNS inflammation. Five SAEs were observed in three participants.
Antibody response
ACI-35 elicited a rapid induction of anti-pTau antibodies after the first immunization in all study cohorts, indicating a T-cell-independent antibody response. However, this response lacked the boosting effect desired
for optimal long-term and potentially preventive application. Therefore, in a collaborative effort, AC Immune and Janssen are developing two optimized anti-pTau vaccine candidates, ACI-35.030 and JACI.35.054, which are currently being tested in
early AD subjects in a Phase 1b/2a study.
ACI-35.030
ACI-35.030 is an optimized liposomal anti-pTau vaccine formulation designed to elicit an enhanced antibody response. In preclinical studies, ACI-35.030 showed that it retains the excellent non-clinical safety profile
and the highly specific antibody response against pTau observed with ACI-35, while demonstrating an enhanced and more uniform antibody response compared to first generation ACI-35. We are developing ACI-35.030 with Janssen in accordance with our
collaboration agreement.
Mechanism of Action
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ACI-35.030 comprises a pTau peptide and a T-cell epitope capable of binding to human leukocyte antigen-major histocompatibility complex, class II (HLA-DR) molecules.
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In rhesus monkeys, ACI-35.030 induced a specific response to pTau over non-phosphorylated Tau, similar to that observed with ACI-35 (Vukicevic et. al. AAT-AD/PD 2020). This is meaningful as Tau
hyper-phosphorylation is considered an early event in the development of Tau pathology, occurring even several decades before the onset of Tau deposits.
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Sera from rhesus monkeys immunized with ACI-35.030 binds specifically to pathological Tau in brain sections with AD as compared to healthy human brain tissue (Kosco-Vilbois, KOL event ‘Untangling’ Tau Pathology to Treat Alzheimer’s and
Neurodegenerative Diseases NYC, Nov 2019)
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In preclinical studies, immunization of non-human primates (NHPs) with ACI-35.030 lead to enhanced and more uniform anti-pTau IgG -specific antibody titers with boosting effect compared to ACI-35 (Figure 14).
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Figure 14: pTau-specific IgG titers in NHP induced by ACI-35.030 and ACI-35
Ref: AC Immune, CTAD 2021.
JACI-35.054
JACI-35.054 is an alternative pTau vaccine, which is developed with Janssen in accordance with our collaboration agreement. In preclinical studies, JACI-35.054 showed good safety, and induced a strong antibody response
against pTau.
Mechanism of action
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JACI-35.054 is an alternative anti-pTau vaccine comprising a pTau peptide antigen conjugated to an immunogenic carrier protein CRM197, combined with adjuvants
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CRM197 is a well-defined recombinant protein that is a commercially available version of a non-toxic mutant of diphtheria toxin (DT) A chain and has been shown to be a safe carrier protein in commercial prophylactic vaccines and clinical
trials for a plethora of different vaccine candidates.
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Immunization of rhesus macaques with JACI-35.054 generates an antibody response that binds to pathological Tau structures in human AD brain.
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Clinical development
Phase 1b/2a study
The Phase 1b/2a study is a randomized, multicenter, double-blind, placebo-controlled clinical study with a primary objective to assess the safety, tolerability and immunogenicity of different dosages of ACI-35.030 and
JACI-35.054 in participants with early AD. Secondary objectives assess additional immunogenicity parameters, while exploratory endpoints include notable biomarkers of progression of AD as well as clinical assessments. This Phase 1b/2a study
evaluating ACI-35.030 and JACI-35.054 was initiated in Q3 2019 and is currently ongoing.
Safety
As of February 11, 2022, 55 subjects have been randomized in the Phase 1b/2a study, of which 39 subjects are randomized into the Cohort 1 (low-, mid-, or high- dose levels of ACI-35.030 or
placebo), and 16 subjects are randomized into the Cohort 2 (low- or mid-dose levels of JACI-35.054 or placebo). The active/placebo ratio is 3:1 in each Cohort. In this study, six SAEs have been reported to date. Each of these events are considered
unlikely related to the study treatment. These events are: one episode of acute diverticulitis and one case of sick sinus syndrome in the low-dose level with ACI-35.030 or placebo; one case of flare of diverticular disease in one subject, and one
left thrombosed popliteal aneurysm and one right popliteal aneurysm in another subject in the high-dose level with ACI-35.030 or placebo; and one case of lumbar disc prolapse leading to hospitalization for surgery in the low-dose level with
JACI-35.054 or placebo.
Antibody response (interim)
Based on interim results from the first two dose-level sub-cohorts, in all patients after the first injection, ACI-35.030 treatment led to the strong induction of antibodies specific for pathological forms of Tau
such as pTau and its aggregated form, enriched paired helical filaments (ePHF). Anti-pTau IgG titers increased by two orders of magnitude from baseline two weeks after the first injection of the mid-dose of ACI-35.030. Anti-ePHF IgG titers
increased by approximately one order of magnitude from baseline as early as two weeks after the second injection at week 8 of the mid-dose of ACI-35.030. The geometric mean of the anti-ePHF IgG response was boosted following additional doses at
weeks 8 and 24. The ACI-35.030-induced immune response was lasting over an initial period of 26-weeks and showed class-switching from IgM to IgG. Interim safety data further support ACI-35.030’s favorable safety and tolerability profile, with no
clinically relevant safety concerns related to the study vaccine observed to date. These results were presented at the CTAD conference in 2021.
Figure 15: ACI-35.030 generates a potent Ab1 response6 against pathological Tau
ACI-35.030 generates strong Ab responses against pTau2 in an older population
(1) Antibody; (2) phosphorylated Tau; (3) Enriched paired helical filaments; (4) at Weeks 2 and 10; (5) at Week 10; (6) Responders were defined as subjects with an antibody response higher than a positivity threshold, i.e., a pretreatment value
(baseline antibody titer), multiplied by a threshold factor (>-2x)
Ref: AC Immune, CTAD 2021.
ACI-24
The original formulation of ACI-24 is an anti-amyloid-beta vaccine candidate that was assessed in AD and in Down syndrome and was shown to be safe and well tolerated along with preliminary evidence of immunogenicity
and pharmacodynamic effects in these 2 study populations.
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ACI-24 consists of an antigenic peptide (Pal1-15) containing the amino acid sequence 1-15 of the human Abeta1-42 protein, and an adjuvant, formulated as liposomal suspension. Pal1-15 is presented on the surface of the liposomes in a
conformational format mimicking the pathological form of the protein which is recognized by the immune system in order to induce antigen-specific antibody responses against the pathological forms of Abeta. Preclinical data demonstrated
significant activity in plaque reduction and memory restoration. ACI-24 formulations have a favorable safety profile, characterized by a lack of observed local and CNS inflammation and a mechanism of action independent of inflammatory T
cells. ACI-24 formulations are fully owned by AC Immune and have been developed in-house.
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Clinical development in AD
Phase 1/2
Phase 1/2 study
The Phase 1 part of the combined Phase 1/2 study is completed, and the clinical study report was finalized in 2019. The efficacy, tolerability and immunogenicity of ACI-24 were tested in patients with mild-to-moderate
AD with four different doses in a randomized, placebo-controlled, double-blind study. The different doses were tested via an ascending dose design in four consecutive cohorts with 12 patients each (nine on active, three on placebo treatment).
ACI-24 was administered with multiple injections per cohort. The initial safety follow-up period for two years was shortened to one year mainly for the patients of the last cohort.
Safety and tolerability
Due to the observed favorable safety profile, the treatment-free safety follow-up period of the Phase 1 part of the study was shortened to one year using a protocol amendment. Fifteen non-drug related SAEs were
observed in the Phase 1/2 study. This ACI-24 vaccine was considered safe and well tolerated.
Antibody responses were observed only in the two higher-dose groups of cohorts 3 and 4, indicating a dose-dependent effect of the vaccine. No IgG antibody response was observed in placebo-treated patients of those
cohorts.
PET Imaging and cognitive measures
Although the study was not powered to examine efficacy, a tendency for reduction in accumulation in brain amyloid measured by PET imaging was observed in cohorts 3 and 4. This was paralleled by
trends in functional improvements as measured by CDR-SB and MMSE at week 52 (MMSE 20-28).
Due to the safety profile and potential dose-dependent reduction of amyloid plaques as measured by PET imaging, this program was advanced into a Phase 2 clinical trial. In order to optimize the
immune response, the route of administration was switched to intramuscular, as this route was associated with a better antibody response in a non-clinical study.
Phase 2
Phase 2 study design
The Phase 2 double-blind, randomized, placebo-controlled adaptive design study assessed the safety, tolerability, immunogenicity and target engagement of ACI-24 formulations in patients with mild AD. It was
conducted in several European countries and the first dosing occurred in October 2018 via the intramuscular route of administration. The full study results were presented at CTAD 2021.
Safety and tolerability
Seven SAEs considered unlikely related or unrelated to study drug were reported in this study in 5 randomized subjects; 3 of the subjects were in the 1000 μg ACI-24 group (Covid-19 infection; pneumonia; and foot
deformity) and 2 subjects were in the placebo group (transient ischemic attack; and 2 episodes of urinary retention and one concussion occurring in one subject). No episodes of ARIA-E or CNS inflammation were reported by MRI. ACI-24 was
considered safe and well tolerated.
Antibody response
The vaccine triggered an IgM response with lower Abeta-specific IgG titers.
Pharmacodynamic and clinical measures
While no apparent effect in amyloid-PET was observed in this limited study population, evidence of a pharmacodynamic effect was shown by an increase of CSF Aβ1-40 and Aβ1-42 levels vs placebo, thereby suggesting
target engagement. No consistent changes in cognitive and other clinical scales were observed over time, though it should be noted that the study was not powered for these endpoints.
Overall, these results support the clinical development of an optimized formulation of ACI-24 with T-cell help to improve the magnitude and the boostability of the antibody response. A CTA submission for the next
study with the optimized formulation of ACI-24 in AD and Down syndrome populations was completed in Q4 2021.
ACI-24 development in Down syndrome-related AD
The AD dementia that commonly develops in people with DS bears remarkable clinical and pathological similarity to familial and sporadic forms of AD and is characterized by progressive changes in Abeta and a number of
other relevant biomarkers. AC immune is pioneering the development of anti Abeta vaccine for these individuals and this may also apply to other populations with genetic predisposition to AD and ultimately to broader sporadic AD patients.
Individuals with DS have an extra copy of chromosome 21, which is where the gene for amyloid precursor protein (APP) resides. These individuals develop AD at a rate that is three to five times that of the general
population and develop the disease at a much younger age. At autopsy, AD pathology has been reported in 80% of people with DS over the age of 40 and 100% over the age of 60 years. The prevalence of AD in people with DS is more than 50% over the age
of 50 and 75–100% over the age of 60 years (Strydom, 2018). It is estimated that there are six million people with DS worldwide, with 250,000 in the US. Preclinical results published by AC Immune in collaboration with Dr. Mobley of the University
of California, San Diego in March 2016, showed, in a DS mouse model (Ts65Dn), a significant 20% memory improvement and a 27% reduction of Abeta in the brain following vaccination with ACI-DS-01, the mouse equivalent of ACI-24.
Phase 1b
Phase 1b study design
A Phase 1b clinical trial was completed in 2020 and evaluated the safety and tolerability of ACI-24, its effect on induction of antibodies against Abeta and changes in biomarkers such as Abeta levels in blood and CSF,
in adult participants with DS. The study was primarily funded by the Company with additional partial funding provided by a grant from the US National Institute on Aging, a part of the US National Institutes of Health (NIH) and an additional grant
from the LuMind Research Down Syndrome Foundation. This dose-escalation study included 16 participants across all cohorts, aged 25−45 years and treated for 12 months, with a 12-month safety follow-up.
Phase 1b results
Study treatment compliance was 100% and ACI-24 was safe and well tolerated in adults with DS, with no serious adverse events (SAEs) or evidence for CNS inflammation, meningoencephalitis, or ARIA. There have been no
early subject withdrawals at any dose during the treatment period. ACI-24 vaccination in adults with DS resulted in encouraging immunogenicity (generation of anti-Abeta antibodies) and a positive pharmacodynamic response as measured by an increase
in plasma Abeta. These results support further clinical development of in DS-related AD with the optimized formulation of ACI-24.
ACI-24.060
AC Immune has developed an optimized anti-Abeta vaccine formulation, ACI-24.060, which demonstrated encouraging safety and superior immunogenicity results in mouse and non-human primate (NHP) studies. Like ACI-24,
ACI-24.060, which contains T-cell help epitopes, has been developed using our SupraAntigen platform and is designed to stimulate a patient’s immune system to produce antibodies that specifically target the misfolded Abeta conformer to prevent
plaque accumulation and to enhance plaque clearance. The Company is pursuing clinical development with ACI-24.060, an optimized formulation of ACI-24 in early AD and in population with DS with presence of brain amyloid pathology.
Mechanism of Action
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ACI-24.060’s mechanism of action is similar to the one described with the original formulation of ACI-24. The incorporation of T-cell help epitopes in this optimized formulation is intended to prime, boost and maintain a strong antibody
response against key pathological Abeta species (including oligomeric and pyroglutamate Abeta). The antibodies elicited by the vaccine in NHPs showed clear target engagement by binding to human Abeta plaques on AD patient-derived brain
tissue.
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AC Immune submitted a Clinical Trial Application (CTA) to the UK Medicines and Healthcare Products Regulatory Agency (MHRA) in Q4 2021 to initiate development of the optimized formulation of ACI-24 in patients with
prodromal AD and in adult subjects with DS with presence of brain amyloid pathology. It then plans for a subsequent Investigational New Drug (IND) application in the USA in early 2023 for the global development of the vaccine candidate.
ACI-7104 – anti-a-syn vaccine
Neurodegenerative conditions with a-syn accumulation, such as Parkinson’s disease, are increasingly linked to dementia and movement disorders in the aging population.
ACI-7104 is an optimized peptide-conjugate vaccine formulation designed to induce a-syn-specific antibodies recognizing aggregated a-syn species that have been demonstrated to be toxic to neurons. In contrast,
ACI-7104-induced antibodies do not bind to the monomeric, physiological form of a-syn and do not cross-react with other members of the synuclein family such as beta- and gamma-synuclein.
A substantial package of preclinical and clinical data has been generated with PD01 (predecessor of ACI-7104). This candidate was tested in two different transgenic mouse models of PD and Dementia with Lewy bodies
(DLB), the mThy1- and the PDGF-human a-syn transgenic mice. Active vaccination with PD01 resulted in decreased a-syn pathology in brain areas most affected by transgene overexpression, including the substantia nigra and the striatum, and this was
accompanied by a reduced neurodegeneration and by improvements in motor and memory deficits in both in vivo models.
PD01 was the first vaccine candidate against pathological a-syn to be tested in a clinical study involving patients with early PD. A series of Phase 1 studies were completed in June 2018. The start of the Phase 2
trial in early PD patients to evaluate ACI-7104 is scheduled to commence in H2 2022.
Mechanism of action
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ACI-7104 is composed of a short engineered antigenic a-syn peptide. This peptide coupled to a carrier protein facilitates the induction of an a-syn-specific antibody response that binds to toxic aggregated a-syn species with high
selectivity (Mandler-M et al., Acta Neuropathol. 2014).
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Vaccination of wild-type and transgenic mice, resulted in high antibody titres in plasma, which crossed into the cerebrospinal fluid (CSF) (Mandler-M et al., Acta Neuropathol. 2014) and
recognized a-syn aggregates. Vaccination resulted in a decreased aggregation and accumulation of a-syn oligomers in brains of transgenic animals (Figure 16).
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Clearance of a-syn was accompanied by reduced neurodegeneration and by improvements in motor and memory deficits in both in vivo models (Mandler-M et al.,
Acta Neuropathol. 2014).
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Figure 16: Immunization with PD01 reduced the accumulation of a-syn aggregates in brains of mThy1-human a-syn transgenic mice
Ref: Mandler M et al., Acta Neuropathol. 2014
Clinical development
Phase 1 study design
The safety tolerability and immunogenicity of the a-syn vaccine were studied over a three and a half year period in 24 early PD subjects. There were four consecutive studies in this group of patients as shown in Figure
17 (Volc et al., The Lancet Neurology 2020 Jul), with patients randomized to receive a lower or higher dose of the alpha synuclein vaccine. After four priming doses, subjects were re-randomized to receive a
booster injection at one of the two doses, followed by a second booster injection at the high dose.
Figure 17: Phase 1 study design
Ref: Volc et al., The Lancet Neurology, 2020
Safety
This Phase 1 study series demonstrated a favorable long-term safety profile for PD01.
Antibody response
PD01 induced a long lasting and boostable antibody response (Figure 18A). Such induced antibodies have been shown to bind preferentially the aggregated species of a-syn. The induced antibodies were also demonstrated to
bind to a-syn aggregates in human PD and DLB brain tissue.
Pharmacological and clinical effect
Evidence for in vivo target engagement and signals for clinical efficacy have been observed in these Phase 1 studies in PD, as immunization was
associated with a decrease in oligomeric a-syn in CSF of treated patients and with a stabilization of clinical scores as shown by the MDS-UPDRS part 3 scores (Volc et al., The Lancet Neurology, 2020 Jul).
Post hoc analyses of this study series delivered highly encouraging data with respect to target engagement and identification of a potential biomarker for PD, including:
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In vivo target engagement of induced antibodies was demonstrated by lowering of oligomeric a-syn in CSF of vaccinated subjects (Figure 18B).
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A highly significant correlation between oligomeric a-syn concentration in CSF and MDS-UPDRS 3 score (motor-symptoms) in PD patients at baseline was shown for the first time.
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The reduction of oligomeric a-syn in CSF correlated significantly with clinical improvement, the changes in MDS-UPDRS 3 score over time (Figure 18C).
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Figure 18: Pharmacokinetic and pharmacodynamic effect of PD01 vaccination in early PD patients
Ref: Volc et al., The Lancet Neurology, 2020
These combined data provide a validation of the role of a-syn in disease progression and demonstrate that a-syn directed vaccination using ACI-7104 has the potential to positively impact clinical outcome. These data
also provide an excellent basis for design of the planned Phase 2 study.
Semorinemab
Semorinemab is a humanized high-affinity IgG4 isotype antibody candidate that binds all forms of Tau. Semorinemab is designed to intercept extracellular Tau, stopping or slowing cell-to-cell spread and propagation of
pathological Tau in the brain. Semorinemab is in Phase 2 clinical development for AD as part of an ongoing collaboration, which was established in 2012, with Genentech.
Lead characterization
Our anti-Tau monoclonal antibody program successfully generated multiple humanized antibodies for potential use as passive immunotherapies, which are highly specific for pathological forms of Tau found in AD and other
Tauopathies. Results from preclinical studies demonstrated a reduction in pathological Tau and improvement of long-term spatial memory. Efficacy studies run in mouse models of AD and other Tauopathies exhibited dose–response alleviation of Tau
pathology with behavioral improvements.
Figure 19: Alleviation of Tau pathology in models of AD
Representative images of hippocampal coronal sections from human Tau-P301L transgenic mice treated with (A) control antibody or (B) semorinemab, and immunostained for pathological Tau deposits
Ref: Ayalon et al., Science Trans. Med. 2021
Clinical development
A Phase 1 clinical trial involving 75 subjects evaluated the safety, tolerability, pharmacokinetics and preliminary data on therapeutic activity of semorinemab in people with AD and in healthy volunteers. This trial
was completed in the second quarter of 2017. Semorinemab was administered at single doses of up to 16,800 mg to healthy volunteers, and at multiple doses of 8,400 mg to healthy volunteers and patients with mild-to-moderate AD. No dose-limiting
toxicities and no SAEs were observed. No participant withdrawals, modifications or interruptions due to an adverse event were reported. Results were presented at multiple conferences, including the 13th International Conference on Alzheimer’s & Parkinson’s Diseases and Related Neurological Disorders (AD/PD) in 2017, the AAIC in 2017, and the 10th international CTAD conference in 2017.
Semorinemab exhibited a dose-proportional pharmacokinetic profile and CNS exposure, with a median half-life of 32.3 days. Plasma total Tau concentration increased with increasing drug doses and was doubled in
participants with AD compared with healthy volunteers, suggesting a pharmacodynamic signal as shown in the figure below.
Figure 20: Phase 1 pharmacokinetic and plasma Tau results
Ref: Kerchner et al., CTAD 2017.
A Phase 2 clinical trial (Tauriel) commenced in Q4 2017 with the dosing of the first patient. This multicenter trial, which enrolled 457 participants, assessed the safety, tolerability and efficacy of semorinemab in
people with prodromal-to-mild AD. Participants received one of three active doses or a placebo for 72 weeks, followed by a 96-week optional open-label extension (OLE) (Figure 21). Primary endpoints included safety assessment and the composite
functional and cognitive endpoint CDR (Clinical Dementia Rating scale) CDR-SB score.
Figure 21: Phase 2 (Tauriel) study design
Ref: Kerchner et al., CTAD 2017
On September 23, 2020, the Company reported that Genentech informed us of top line results which showed that semorinemab did not meet its primary efficacy endpoint of reducing decline on Clinical
Dementia Rating-Sum of Boxes (CDR-SB) compared to placebo. Two secondary endpoints, Alzheimer’s Disease Assessment Scale-Cognitive Subscale 13 (ADAS-Cog13) and Alzheimer’s Disease Cooperative Study Group – Activities of Daily Living Inventory
(ADCS-ADL), were also not met. The primary safety endpoint was however met.
Further analyses revealed a dose-dependent increase in serum pharmacokinetics and evidence of target engagement, measured by an increase in plasma Tau levels, which is consistent with previous Phase 1 study results
(Figure 22).
Figure 22: Phase 2 (Tauriel) study peripheral pharmacokinetic and pharmacodynamic results
Ref: Teng et al., CTAD 2020
Semorinemab did not show a dose-dependent effect on Tau PET signal in the brain. However there was evidence of central target engagement from assessment of soluble tau in CSF: N-terminal Tau increased with exposure,
and pTau181 and mid-domain Tau decreased.
Figure 23: Phase 2 (Tauriel) study CSF target engagement
Ref: Wildsmith et al., AD/PD 2021
A second Phase 2 trial (Lauriet) was initiated in Q1 2019. This is a multicenter study enrolling 272 participants, and is designed to evaluate the clinical efficacy, safety, pharmacokinetics and pharmacodynamics of
semorinemab in patients with moderate AD [Mini Mental State Examination (MMSE) 16–21, CDR-GS 1 or 2]. The study consists of a screening period, a double-blind treatment period of 49 weeks, an optional OLE period, and a follow-up period, with the
11-item Alzheimer’s Disease Assessment Scale-cognitive subscale (ADAS-Cog11) and Alzheimer’s Disease Cooperative Study-Activities of Daily Living tools as the primary endpoints, and CDR-SB, MMSE and safety as secondary endpoints. Primary completion
(last patient, last visit) was in Q2 2021.
On August 31, 2021 the Company reported that Genentech had informed the Company that the Lauriet study had met one of its co-primary endpoints, ADAS-Cog 11. The second co-primary endpoint, ADCS-ADL, was not met. Safety
data showed that semorinemab was well tolerated with an acceptable safety profile and no unanticipated safety signals. On November 10, 2021, the Company reported that Genentech had presented the full top-line data from the Lauriet study during a
late-breaking session at the 14th Clinical Trials on Alzheimer’s Disease conference.
272 subjects were randomized into the study and 267 dosed. 49 study centers participated in the US, France, Spain and Poland. In a modified intent to treat (mITT) population of all trial participants who had
received at least one dose of study drug and had at least one post-baseline ADAS-Cog 11 assessment, there was a 42.2% slowing of cognitive decline compared to placebo, the result being highly statistically significant (p=0.0008).
Figure 24: Effect of semorinemab on cognition assessed by ADAS-Cog11
Ref: Monteiro C. et al., CTAD 2021
The effect on ADAS-Cog 11 was consistently seen at around the same magnitude in subgroup analyses looking at subjects with higher or lower baseline severity assessed by MMSE, brain tau load assessed by GTP1-PET and
different ApoE genotypes. The effect on ADAS-Cog11 was driven by an effect on memory items in the scale. No changes were apparent in functional measures including the co-primary endpoint ADCS-ADL, and the secondary endpoint, CDR-SB, and there was
no significant effect in the other secondary endpoint, the MMSE. The reason for the lack of functional effects is unclear. Regular interim analyses in the ongoing extension study are being made to test for later effects on function. Plasma tau
rose markedly during the study confirming peripheral target engagement, with serum levels of semorinemab in the expected range. The ratio of CSF to plasma semorinemab concentration was 0.29%, in the expected range for similar monoclonal
antibodies. There was no apparent effect on global or regional brain tau load assessed by GTP-1 PET. CSF biomarker data are not yet available. Safety data indicated that semorinemab was well tolerated, with no difference in the frequency of
serious or non-serious adverse events or discontinuations due to adverse events.
The results are the first evidence for an effect of an anti-tau immunotherapy on cognition. Data from the ongoing open-label extension phase of the study and CSF biomarkers when available will help in further
interpretation of the results.
Crenezumab
Crenezumab is a humanized, conformation-specific monoclonal antibody that targets misfolded Abeta and has a broad binding profile. Crenezumab was developed using our proprietary SupraAntigen platform. In 2006, we
licensed crenezumab to Genentech, a company with a long history of developing and commercializing innovative biologics.
Mechanism of action
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Crenezumab binds to multiple forms of Abeta, particularly oligomeric forms, which it binds to with ten times higher affinity than to monomers. This is a desirable property since oligomeric forms of Abeta are believed to be principally
responsible for neurotoxicity in AD.
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Crenezumab localizes to brain regions rich in oligomers, including the halo around plaques and hippocampal mossy fibers, but not to vascular Abeta (Maloney et al., 2019).
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Crenezumab has been designed with an IgG4 backbone to reduce effector function on microglia compared with an IgG1 backbone, and to clear Abeta from the brain while limiting inflammation by minimizing FcγR-mediated inflammatory activation
of microglia (Adolfsson et al., J. Neurosci 2012).
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Figure 25: Crenezumab’s IgG4 backbone balances efficacy with safety
Ref: Data reported in Adolfsson et al., J. Neurosci 2012
The potential for a better safety profile derived from a human IgG4 rather than a IgG1 backbone has been born out in practice by the safety findings from the Phase 1, 2 and 3 clinical studies of crenezumab, in which,
following either single or multiple doses, no increase in ARIA-E was reported (Cummings et al., 2014 and Cummings et al., 2018).
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Due to its capacity to bind to multiple forms of Abeta, with 10-fold higher specificity to oligomers, which are thought to be the most toxic species, crenezumab also protects against oligomer-induced neurotoxicity.
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Linked to its unique epitope, crenezumab has been shown to promote disaggregation of existing Abeta aggregates and to disrupt their assembly, preventing amyloid plaque formation. The crystal structure reveals binding interactions that
are consistent with this flexible binding profile and provides further explanation for crenezumab’s ability to block aggregation and to promote disaggregation.
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Signal of activity in patients with milder AD (MMSE 22–26) in Phase 2 clinical trials
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In the proof-of-concept Phase 2 studies of crenezumab, a positive trend in cognition was observed, with a greater effect on cognition in patients with a milder stage of AD (MMSE 22–26).
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In the ABBY cognition study, there, was a statistically significant 35% reduction in the rate of cognitive decline in the non-pre-specified milder AD patient population (MMSE 22–26) for the high-dose arm.
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In the BLAZE biomarker study, the high-dose arm showed a consistent trend of reduced Abeta accumulation in the brain over time, as shown in two independent exploratory analyses of florbetapir-PET data. In addition, results have shown
that crenezumab has the ability to enhance the removal of these proteins from the brain as evidenced by a significant increase in CSF Abeta, confirming target engagement by crenezumab.
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Favorable safety profile allowing for higher dosing
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Phase 2 data from ABBY and BLAZE studies suggested that there were no imbalances in overall rate of AEs, and these were not dose-related, with only one case of asymptomatic ARIA-E (0.4% in ABBY, 0.3% on active pooled) in patients treated
with crenezumab. AEs also included inflammation of the throat and nasal passages, urinary tract infections and upper respiratory infections. However, no patients in the studies experienced SAEs that were believed related to the
administration of crenezumab.
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A Phase 1 study with higher doses of crenezumab up to 120 mg/kg showed good tolerability with no investigator assessed drug-related SAEs and no events of ARIA-E, supporting the dose of 60 mg/kg in the Phase 3 CREAD clinical trials.
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The good safety profile and lack of induction of ARIA-E was confirmed in the Phase 3 CREAD and CREAD 2 studies, in which there was no increase in incidence of SAEs compared with placebo.
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Crenezumab is currently being evaluated in a Phase 2 clinical prevention trial in Colombia, which has enrolled 300 cognitively healthy individuals of whom 200 are genetically predisposed to develop early AD. As of January 2019, two Phase
3 clinical trials, CREAD and CREAD 2, in patients with prodromal-to-mild AD were discontinued after an interim analysis of the CREAD study conducted by our collaboration partner Genentech.
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Clinical development
Phase 2 studies
Phase 2 study design overview
Crenezumab has been studied in two Phase 2 clinical studies, the ABBY proof-of-concept study and the BLAZE biomarker study. These two studies enrolled a total of 522 patients. The purpose of these studies was to
investigate whether crenezumab could delay cognitive and functional decline and reduce the accumulation of brain amyloid in patients with mild-to-moderate AD. The sample size of the studies was not expected to have adequate power to detect a modest
but clinically significant difference between active medication and placebo at the 5% significance level (as is commonly the case in Phase 2 studies in AD). Instead, consistent trends across different endpoints and dose dependencies were considered
indicators of a response in this learning phase of development, with confirmation to then be sought in Phase 3. Both studies had two active arms: a low-dose arm receiving 300 mg subcutaneous injection, every 2 weeks and a higher-dose arm receiving
15 mg/kg intravenously every 4 weeks. The primary analysis was conducted at 73 weeks, after 68 weeks of treatment. Safety and tolerability measures included repeated MRI scans to assess for the development of ARIA, both vasogenic edema (E) and
hemorrhages (H).
ABBY study results
In the ABBY study, a positive trend in cognition was observed with a greater effect on cognition in patients with a milder stage of AD (MMSE 22–26), although the study did not meet its co-primary endpoints in patients
with mild-to-moderate AD (MMSE 18–26). There was no significant change in cognition in patients who received low-dose subcutaneous crenezumab. Results of an exploratory analysis of the high-dose intravenous arm demonstrated that patients with the
mildest cognitive impairment at screening (MMSE 22–26) showed a statistically significant 35% slowing of the rate of cognitive decline over 73 weeks. The effect became greater over time, as shown by the increasing separation of the crenezumab
(solid line) and placebo (dashed line) curves in the figure below. The milder group was not pre-specified, meaning the group of patients with milder AD was not identified before commencing the Phase 2 clinical studies.
Figure 26: ABBY high-dose arm: Change in ADAS-Cog 12
Ref: Cummings et al., AAIC, 2014
An exploratory subanalysis in a non-pre-specified subgroup of patients with milder symptoms (MMSE 22–26) showed a 35.4% reduction in cognitive decline. The sample size of the study was not expected to have adequate
power to detect a modest but clinically significant difference between active medication and placebo at the 5% significance level (as is commonly the case in Phase 2 studies in AD). Instead, consistent trends across different endpoints and dose
dependency are considered indicators of a response in this learning phase of development, with confirmation then sought in Phase 3. In the pre-specified subgroup analysis in patients with mild AD (MMSE 20–26), treatment with high-dose intravenous
crenezumab led to a 23.8% reduction in cognitive decline. In patients with mild-to-moderate AD (MMSE 18–26) treated with high-dose intravenous crenezumab, there was a 16.8% reduction in cognitive decline. Effect sizes and p-values for exploratory
analyses were not adjusted for multiplicity.
BLAZE study design
The BLAZE study was a randomized, double-blind, parallel-group, placebo-controlled study to evaluate the effects of crenezumab on brain amyloid burden as assessed by amyloid PET imaging and other biomarker endpoints in
patients with mild-to-moderate AD. The primary endpoint was the change in brain amyloid load using florbetapir-PET. The terms “brain amyloid burden” and “brain amyloid load” refer to the total amount of amyloid deposited in the brain. In total, 91
patients were included in the study.
BLAZE study results
The primary endpoint of change in brain amyloid load by florbetapir-PET was not met, but the study was not powered to detect statistically significant results. However, positive trends were observed as shown below in
exploratory analyses of the BLAZE amyloid PET results using a white matter reference region, which is considered a more sensitive approach for longitudinal studies. These analyses, conducted independently by two laboratories, the Banner Alzheimer’s
Institute and MNI Laboratories, produced analogous results, with a trend in the reduction of Abeta accumulation observed in the high-dose arm (Figure 27). As described below, a similar result was obtained in the Phase 3 studies.
Figure 27: Blaze high-dose arm: amyloid PET results
Ref: Honigberg et al., CTAD 2014
The BLAZE biomarker study high-dose intravenous cohort showed a consistent trend of reduced Abeta accumulation in the brain over time as shown by two independent exploratory analyses of florbetapir-PET data. Using
white matter rather than cerebellum as the key reference region in the brain is generally considered a more robust method of showing treatment effects of AD therapies.
In the BLAZE study, patients also showed a statistically significant increase in CSF Abeta1–42, which we believe confirms target engagement
by crenezumab. Similar results were observed in the ABBY study, which assessed CSF Abeta1-42 level in 49 patients. These results suggest that Abeta is being eliminated
from the brain when treated with crenezumab.
Figure 28: BLAZE high-dose arm: crenezumab increases CSF total Abeta levels relative to placebo
Ref: Honigberg et al., CTAD 2014
The BLAZE study results suggest that Abeta is being eliminated from the brain as patients showed a statistically significant increase in CSF Abeta1–42,
which confirms target engagement by crenezumab.
Safety data from ABBY and BLAZE studies
Crenezumab demonstrated favorable safety and tolerability in Phase 2 clinical studies even at high doses. Crenezumab’s safety profile is especially reflected in a low incidence of ARIA-E (0.3%) in Phase 2 clinical
studies. ARIA-E was observed in only one patient who received high-dose intravenous crenezumab in the ABBY study. No case of ARIA-E was reported in the placebo arm or the BLAZE study. Favorable pharmacokinetic properties coupled with a favorable
safety and tolerability profile enables crenezumab to penetrate the brain more readily at therapeutically relevant doses. As dose-limiting toxicities are a potential reason for the failure of other antibodies to demonstrate efficacy, crenezumab’s
potential safety at high doses is a distinguishing product feature.
At AAIC in 2014, it was reported that in the combined Phase 2 study populations, SAEs occurred at similar rates in patients treated with crenezumab (16.5%) and in patients given a placebo (11.9%).
Phase 1b study to explore higher doses
To explore safety at higher doses, crenezumab was tested in a Phase 1b dose-escalation clinical study (NCT02353598) conducted in the US. This randomized, placebo-controlled, double-blind, four parallel-arm study
evaluated the safety and tolerability of at least four doses of intravenous crenezumab in 77 patients with mild-to-moderate AD (MMSE 18–28) between the ages of 50 and 90 years. An optional OLE stage was offered to patients after completion of the
double-blind stage of the study. At the 2017 AAIC meeting, Genentech presented the results of the four cohorts with mild-to-moderate AD. No dose-limiting toxicities were observed at crenezumab doses of 30, 45, 60 and 120 mg/kg. No events of ARIA-E
were observed and only few patients (6 of 75) showed asymptomatic ARIA-H. The pharmacokinetic profile of crenezumab was dose-proportional up to the 120 mg/kg dose, with the 60mg/kg dose being selected for the Phase 3 CREAD and CREAD 2 studies.
Phase 2 AD prevention study
There is increasing understanding from studies in patients at risk of AD due to genetic mutations that the build-up of Abeta in the brain is a very early event in the condition, starting around 25 years before symptoms
develop (McDade et al. 2018). To treat the underlying amyloid pathology effectively it may therefore be necessary to use anti-amyloid therapies in a preventive mode, starting in patients in whom symptoms
have not yet emerged.
In 2012, crenezumab was independently selected from among 25 product candidates for use in the first-ever such AD prevention study. The study, a collaboration worth USD 100 million between the NIH, Banner Alzheimer’s
Institute and Genentech, is the cornerstone of the global Alzheimer’s Prevention Initiative. Crenezumab is being administered pre-symptomatically to 300 members of an extended Colombian family, of which 200 members carry a mutation that causes
early-onset AD. Family members usually develop symptoms before the age of 45 years. The 5-year study has cognitive endpoints. An interim analysis is possible according to the protocol, but the data and results of that analysis may not be made
public due to patient sensitivity. The study commenced Q4 2013 and the data for the primary outcome measures are expected in H1 2022.
Figure 29: Crenezumab AD prevention trial (Alzheimer’s Prevention Initiative ADAD): unique population to study prevention treatment
(1) Mild cognitive impairment; (2) Alzheimer’s disease; (3) Presenilin-1
Ref: McDade et al., Neurology 2018
Phase 3 studies (CREAD and CREAD 2)
The randomized, double-blind, placebo-controlled, parallel-group Phase 3 CREAD study enrolled about 750 participants with prodromal or mild AD at the age of 50−85 years. A high dose of crenezumab (60 mg/kg) was
administered intravenously once every 4 weeks for 100 weeks. The primary outcome measure was the change from baseline to week 105 in CDR-SB score. An exposure–response model to evaluate the best dose of crenezumab for the treatment of AD was
established, which predicted an improved outcome of the Phase 3 CREAD study by using the higher dose of 60 mg/kg relative to the Phase 2 trials (Polhamus et al., CTAD 2016).
On January 30, 2019, we announced that Roche, the parent company of our collaboration partner, is discontinuing the CREAD and CREAD 2 (BN29552 and BN29553) Phase 3 studies of crenezumab in people with prodromal-to-mild
sporadic AD. The decision came after an interim analysis of the first CREAD study conducted by the IDMC, which indicated that crenezumab was unlikely to meet its primary endpoint of change from baseline in CDR-SB score.
As presented at CTAD 2019, target engagement was observed with increases in levels of Abeta1–42 in blood and CSF. As shown in Figure 30,
the number of subjects available for analysis fell significantly after the baseline. Due to the early termination of the studies, data at the 2-year timepoint was only available for 17 of the 139 crenezumab subjects in whom CSF Abeta was analyzed.
Figure 30: CSF total Abeta42 and total Abeta change from baseline, pooled CREAD/CREAD2 results
Ref: Bittner et al., Roche CTAD 2019
Reduced accumulation of Abeta in the brain on florebetapir amyloid PET scans was observed, with a pattern very similar to that observed in the Phase 2 BLAZE studies.
Figure 31: [18F] Florbetapir amyloid PET standard uptake value ratio (SUVR) change from baseline, pooled CREAD/CREAD2
Ref: Bittner et al., Roche CTAD 2019
A numerical trend to reduction in level of total Tau and phospho-Tau 181 (pTau181) in the CSF in patients on crenezumab compared with placebo was observed although the small numbers in the analysis due to early
termination of the studies preclude firm conclusions from being drawn.
Figure 32: CFS total Tau and pTau181 change from baseline, polled CREAD/CREAD2
Ref: Bittner et al., Roche CTAD 2019
Positive trends on a range of biomarkers associated with AD in CSF including neurogranin, neurofilament light chain (NFL), Glial fibrillary acidic protein (GFAP), soluble Triggering receptor expressed on myeloid cells
2 (sTREM2), Chitinase-3-like protein 1(YKL-40) and a-syn were reported by Roche at the CTAD 2019 conference, although again the small numbers due to early termination of the studies limit interpretability of the results.
Figure 33: Exploratory biomarkers: Roche NeuroToolkit
Ref: Bittner et al., Roche CTAD 2019
Safety in the CREAD and CREAD 2 studies
The decision to terminate the CREAD and CREAD 2 was not related to safety. No safety signals for crenezumab were observed in this analysis and the overall safety profile was similar to that seen in previous trials.
There was no difference in the rate of newly developing ARIA-E (0.3%) between the active and placebo arms and the rates of ARIA-H were also similar (8.8% on crenezumab vs 6.8% on placebo).
Prevention trial in familial AD
As described above crenezumab continues to be studied under the Alzheimer’s Prevention Initiative in a preventive trial in Colombia, which began in 2013, of cognitively healthy individuals with an autosomal-dominant
mutation who are at risk of developing familial AD.
Morphomer Tau
Approximately 2,000 compounds were screened so far for the Morphomer Tau program. This allowed the identification of several chemical series of orally bioavailable small molecules with suitable CNS properties. The lead
compounds displayed selectivity for binding to pathological Tau aggregates in preference to other protein aggregates. In addition, the lead compounds were able to prevent Tau aggregation and promote its disaggregation. Further characterization
using multiple orthogonal in vitro, ex vivo and in vivo tests addressing pharmacology absorption, distribution,
metabolism, and excretion (ADME), and safety properties led to the identification of the first clinical candidate ACI-3024.
ACI-3024
ACI-3024 is a potent Tau aggregation inhibitor active against the 3R and 4R human Tau isoforms as well as the mutant forms associated with human Tauopathies, such as FTLD-Tau (e.g., PSP, Pick’s disease, corticobasal
degeneration). ACI-3024 selectively binds to aggregated Tau and does not bind to the monomeric forms of Tau. Moreover, the binding to Tau aggregates is selective, with no cross-reactivity to aggregates of Abeta and a-syn.
ACI-3024 showed a potent and dose-dependent reduction in spontaneous intracellular Tau aggregation and misfolding as measured by immunocytochemistry in human neuronal-like cells over-expressing Tau. Furthermore,
ACI-3024 promoted ex vivo disaggregation of Tau neurofibrillary tangles on human AD brain sections.
The in vivo efficacy of ACI-3024 was evaluated in the Tg4510 mouse model (Ramsden et al., 2005). In
vivo treatment of Tg4510 transgenic mice with ACI-3024 reduced aggregated and insoluble hyper-phosphorylated Tau. Immunohistochemistry analysis of misfolded Tau using an MC1 antibody in Tg4510 brain sections of the same mice treated with
ACI-3024 showed reduction of misfolded Tau. These effects were proportional to the plasma concentration of ACI-3024 (Figure 34).
Total Tau concentration in cerebrospinal fluid (CSF) was inversely correlated with ACI-3024 exposure in plasma, suggesting the possibility of exploring CSF Tau concentrations as a biomarker of target engagement.
Further work is ongoing to evaluate ACI-3024 in selected NeuroOrphan indications.
Figure 34: Dose-dependent reduction in Tau misfolding in vivo
Ref: AC Immune unpublished data
Preclinical safety
ACI-3024 has a good in vitro and in vivo ADME profile, including low clearance, long half-life and good CNS disposition as assessed by
brain and CSF concentrations. ACI-3024 was negative in in vitro and in vivo genotoxicity assays [Ames, micronucleus test (MNT) and mouse lymphoma cell mutagenesis
(MLY)] and has undergone an extensive toxicology and safety pharmacology assessment. The no observed adverse effect level has been established at 300 mg/kg in rodent and at 450 mg/kg in non-rodent animals after 4 weeks of treatment (Poli, CTAD
2018).
Effect on neuroinflammation
ACI-3024 efficacy on pathological Tau-induced neuroinflammation was assessed in vitro and in vivo. In
vitro, ACI-3024 induced a potent reduction of Tau-induced neuroinflammation markers (Figure 35, below). In vivo, in Tg4510 mice, treatment with ACI-3024 overall reduced microgliosis, most likely as
a downstream consequence of reducing Tau pathology, by reducing the derived pathological Tau-induced microglial activation (Figure 35).
Figure 35: ACI-3024 significantly reduces Tau-induced neuroinflammation
Ref: AC Immune unpublished data
Clinical development
Phase 1 study
This Phase 1 study was a first-in-human (FiH), randomized, placebo-controlled, double-blind, sequential single and multiple ascending dose study. The study assessed the safety, tolerability, pharmacokinetics, and
pharmacodynamics of ACI-3024. Part I included five single ascending doses in healthy volunteers, with a food effect assessment in the fourth dose cohort. In Part II, three escalating multiple dose regimens were evaluated; regimen two was assessed
in different populations of healthy volunteers. CSF samples were collected from the highest multiple dose group.
The study was executed as planned and all single and multiple dosing regimens were completed in healthy young, elderly, and Japanese subjects. ACI-3024 was administered following single or multiple oral doses and
dose-dependent plasma exposure was observed. ACI-3024 showed a long half-life (47.5 to 101 h), with steady state reached after 12-13 days. Low renal clearance was shown. After multiple doses, ACI-3024 concentrations in CSF exceeded target
concentrations based on animal studies.
Plans to conduct additional clinical trials with ACI-3024 in AD have been suspended. The Companies have decided to pursue other promising Tau Morphomer candidates from AC Immune’s research platform for potential
clinical development in AD.
Figure 36: Morphomer Tau therapeutic program: summary and outlook
Tau diagnostics
The severity of cognitive impairment in patients with AD is correlated with the presence of Tau protein tangles, leading us to believe that an imaging agent for Tau is equally, if not more important than Abeta-PET to
assess spreading of pathology in the brain. In May 2020, Eli Lilly received FDA approval for the first Tau PET tracer TAUVID (flortaucipir F18 injection). However, TAUVID received approval only for a pathology indication (i.e., correlation with
histopathology findings in Braak 5 and 6 patients), but has not received a prognostic label (i.e., prediction of cognitive deterioration based on a positive Tau PET scan.)
Our Tau-PET tracers are designed to bind specifically to the pathological forms of human Tau in AD and other Tauopathies. They have demonstrated an excellent PET tracer profile with their ability to cross the blood
brain barrier and a high selectivity to pathological Tau even in the early-stage disease.
In May 2014, we established a license and collaboration agreement for our Tau-PET imaging program with LMI. The Phase 1 clinical study of our clinical candidate PI-2620 in AD was completed in Q1 2018. LMI commenced a
Phase 2 longitudinal study in AD of the program in Q3 2019. The Phase 2 longitudinal study in AD in South Korea (Asan Medical Center) was completed in Q4 2021.
PI-2620 is selective for Tau over Abeta and other “off-target” binding compared with current published Tau-PET agents in development, as no binding to Abeta in vivo and no
“off-target” retention in basal ganglia or choroid plexus was observed. In addition, PI-2620 can be readily radiolabeled with fluorine 18. A major differentiator for PI-2620 is its ability to bind 4-repeat (4R) Tau isoforms, which are present in
varying amounts in different neurodegenerative diseases. Most Tau PET tracers in development are not able to bind 4R Tau and are of limited use for certain diseases driven by these Tau species. Thus, two test-retest studies (Phase 1) in PSP are
open and recruiting with results anticipated in H2 2022. Due to its ability to detect 4R Tau aggregates, PI-2620 is the first and only PET imaging agent to receive orphan drug designations for the diagnosis of PSP and CBD.
Figure 37: PI-2620 – Distinguishing the clinically predicted Tau isoform in different tauopathies
Ref: Song et al., J Cereb Blood Flow Metab. 2021
Figure 37 above shows Abeta PET images (left) together with Tau PET (right) SUVR images of cortical areas of patients with 3/4R (top), 4R (middle) tauopathies and healthy control (bottom). Thus, PI-2620 binding
characteristics in cortical regions differentiated between 3/4R- (AD) and 4R-tauopathies (PSP, CBD) and might serve as a supportive readout in the diagnostic workup of neurodegenerative disorders.
Figure 38: PI-2620 – differentiated CBD subtypes
Ref: Palleis et al., Mov Disord. 2021
The PI-2620 Tau-PET data displayed in Figure 38 above shows the average PI-2620 distribution volume ratio (DVR) binding maps presented as axial overlays on a standard MRI template for all study groups (Aβ[-]CBS, n = 34
(top); Aβ[+]CBS, n = 11 (middle); and controls (CTRL), n = 14 (bottom)). Extracerebral voxels were masked. Images from patients with left-dominant symptoms were flipped. Thus, the data indicated a value of PI-2620 for evaluating corticobasal
syndrome, providing quantitatively and regionally distinct signals in β-amyloid-positive as well as β-amyloid-negative corticobasal syndrome. In corticobasal syndrome, PI-2620 may potentially serve for a differential diagnosis and for monitoring
disease progression.
Figure 39: PI-2620 – in silico docking of PI-2620 in AD
Ref: Kroth et al., J Med Chem. 2021
Figure 39 above shows the in silico docking of PI-2620 into site1 utilizing a dodecamer model of paired helical filament (PHF) (A). Potential binding interactions between
PI-2620 and adjacent amino acid residues of site1 are indicated with black arrows (B).
Tau diagnostics are a major market opportunity that will be driven by the growth in the aging population and the testing and availability of disease-modifying drugs. We believe a best-in-class Tau tracer has the
potential to achieve a substantial global market share in this large and growing market, which includes AD as well as other important Tauopathies.
A-syn diagnostics
We are also developing PET imaging agents to detect a-syn, which progressively accumulates in the brains of PD patients and is believed to be central to the neurodegenerative process of PD, as well as several other
disorders, including Lewy body dementia and MSA, making it a priority target for development of therapeutics and diagnostics. We have identified molecules leveraging our Morphomer technology that selectively bind to a-syn pathological structures
from human PD brain with affinity in the low-nanomolar range.
In 2021, we completed the clinical evaluation of our second generation clinical candidate ACI-3847 by showing no differences in tracer retention between in patients with synucleinopathies compared to controls.
In the same timeframe, we have also initiated the clinical development of our third-generation candidate, ACI-12589. Compared to the second-generation tracer, ACI-12589 retained the good selectivity and pharmacokinetic
profile while also showing a significantly increased signal specificity in PD versus non-diseased human tissues (Figure 40). The current status of the program was presented at AD/PD 2021 and AAIC 2021.
The Phase 1-enabling preclinical and manufacturing activities for ACI-12589 were completed in 2020 and the IND was accepted in early 2021. The FiH clinical evaluation of the third-generation tracer in PD, MSA and
other a-synucleinopathies began in February 2021 and the readout is expected by Q2 2022.
Figure 40: 3rd generation alpha-synuclein tracers with improved properties
(1) Parkinson’s disease; (2) Alpha synuclein; (3) Parkinson’s disease with dementia; (4) PD with SNCA G51D mutation; (5) Non-diseased control; (6) Non-specific
Ref: AC Immune, AAIC Conference, 2020
Currently there are no imaging products in the market that target a-syn. This provides us with the opportunity to become the market leader in a-syn PET imaging. We believe the ability to image a-syn deposits in the
brain will enable a fundamental change in the approach toward diagnosing and treating PD and other a-syn-associated diseases.
Our preclinical programs
Using our SupraAntigen and Morphomer platforms, we have generated additional discovery and preclinical stage molecules targeting key pathologies that drive a range of neurodegenerative diseases, including TDP-43,
a-syn, and NLRP3. We are accelerating the development of several therapeutic product candidates currently in preclinical development, including several programs focused on indications outside of AD as a critical part of our expansion strategy.
Figure 41: Key pathologies for further pipeline expansion
(1) Frontotemporal lobar degeneration; (2) Amyotrophic lateral sclerosis; (3) Limbic-predominant age-related TDP-43 encephalopathy; (4) TAR DNA-binding protein 43; (5) Alpha-synuclein; (6) NOD-like receptor protein 3
Based on the data to date, our technology platforms can be applied to misfolded proteins across a broad range of indications. Five of our preclinical programs are outlined below:
Product candidate
|
Target
|
Lead application
|
Partner
|
Platform
|
a-syn antibody
|
a-syn
|
PD, NeuroOrphan
|
Proprietary
|
SupraAntigen
|
Morphomer a-syn
|
a-syn
|
PD, NeuroOrphan
|
Proprietary
|
Morphomer
|
Anti-TDP-43
antibody
|
TDP-43
|
NeuroOrphan
|
Proprietary
|
SupraAntigen
|
Morphomer
inflammasome
|
NLRP3-ASC
|
CNS, non-CNS
|
Proprietary
|
Morphomer
|
Anti-inflammasome
antibody
|
NLRP3-ASC
|
CNS
|
Proprietary
|
SupraAntigen
|
AC Immune’s proprietary SupraAntigen platform is used to generate antibodies that can be used as therapeutic and diagnostic products. Such antibodies are generated by injecting the full-length protein and/or
corresponding peptide constructs in mice and by selecting the antibodies for their ability to bind to and break up aggregated forms of misfolded proteins. The a-syn and TDP-43 antibodies were discovered using the SupraAntigen technology platform.
Both antibodies have unique binding properties allowing them to bind to unique epitopes of the pathological forms of a-syn and TDP-43, respectively.
A-syn antibody
The a-syn antibodies generated using our SupraAntigen platform have unique binding properties allowing them to bind preferentially to the pathological forms of a-syn. A-syn aggregation and spreading are established
targets for PD, MSA and other synucleinopathies. Antibodies that interfere with the aggregation and spreading mechanisms of a-syn provide a therapeutic option for the treatment of PD. The a-syn antibodies were able to significantly delay the seeded
aggregation of pathological a-syn in an in vitro aggregation assay, and were able to significantly decrease pathological a-syn spreading in an in vivo animal model
of PD. Characterization using multiple orthogonal in vitro and in vivo tests addressing binding, specificity, functionality and pharmacological properties has led
to the identification of the lead candidate ACI-5755.
Lead characterization
ACI-5755 selectively binds to pathological forms of a-syn with low-nanomolar affinity and shows a significant preference over monomeric a-syn. Additionally, ACI-5755 shows strong recognition for pathological a-syn in
patient-derived tissues in both PD and MSA. ACI-5755 showed a potent and dose-dependent reduction in the seeding capacity of pathological a-syn in a proprietary in vitro aggregation assay. Moreover,
ACI-5755 substantially reduced the propagation of a-syn aggregates in a cell-based model. The in vivo efficacy of ACI-5755 was evaluated in the M83 propagation mouse model (Luk et al., 2012). Treatment of mice with ACI-5755 significantly decreased pathological a-syn spreading in vivo. Furthermore, a significant reduction in the rate of body weight loss compared
with the vehicle-treated control group was observed for mice treated with ACI-5755.
Morphomer a-Syn
Leveraging our Morphomer platform, we identified and characterized the first biologically active small molecule inhibitors targeting intracellular a-syn aggregates. Initial compounds, from several distinct chemical
series, significantly decrease a-syn aggregate accumulation in neurons by interfering with the fibrillation process. Iterative medicinal chemistry optimization led to the identification of orally available and well-tolerated compounds with
favorable CNS-penetrant pharmacokinetic properties, which will be progressed into in vivo proof-of-concept studies in animal models of alpha-synucleinopathies. Medicinal chemistry efforts will continue on
improving properties of lead chemical series, in parallel to identifying structurally diverse compounds fulfilling the target product profile.
In December 2021, the Company received a grant from the MJFF to fund the optimization of the current compound series and declare a preclinical lead, which will commence in Q1 2022.
TDP-43 antibody
TDP-43 is a recently identified target of growing interest for NeuroOrphan indications such as frontotemporal dementia (FTD) and ALS. Interestingly, TDP-43 also plays an important role in other significant
neurodegenerative indications such as AD or LATE.
Anti-TDP-43 antibodies binding to various regions of TDP-43 were generated by our SupraAntigen platform. A subset displayed conformational selectivity to misfolded TDP-43, while
others recognized all TDP-43 isoforms (Figure 42A). Multiple antibodies were generated and characterized in vitro, from which two pan-TDP-43 antibodies (ACI-5891 and ACI-5886) were selected for the
evaluation of their efficacy in mitigating TDP-43 aggregation in vitro and in vivo (Figure 42B-C). ACI-5891 showed a high binding affinity for TDP-43 and ability
to reduce TDP-43 aggregation in vitro and in vivo.
Lead characterization
To evaluate the functional efficacy of TDP-43 antibodies in vitro, the ability of ACI-5891 to inhibit TDP-43 aggregation was tested. In an in
vitro assay with recombinant TDP-43, ACI-5891 significantly inhibited TDP-43 aggregation by 98% compared with the isotype control and significantly promoted their phagocytosis by mouse primary microglia. Using FTLD-TDP patient-derived
brain extracts to induce templated TDP-43 aggregation in vitro, ACI-5891, which binds to the C-terminal domain of TDP-43, was able to substantially interfere with this process of seeding (Figure 42YB).
Moreover, ACI-5891 demonstrated functional efficacy in vivo by reducing pathological TDP-43 in two different mouse models of ALS and FTD (Figure 42C). Our findings demonstrate, for the first time, that a
monoclonal antibody targeting the C-terminal region of TDP-43 limits pathology and neurotoxicity by enabling clearance of misfolded TDP-43 through microglia engagement and support the clinical strategy to target TDP-43 by passive immunotherapy.
ACI-5891 humanization and manufacturability assessment
ACI-5891 was successfully humanized on a human antibody framework. Several variants had a similar binding capacity for TDP-43 as well as potency for inhibition of TDP-43 aggregation as compared to the chimeric
monoclonal antibody. The target values were achieved for the lead candidates in terms of target affinity, functional efficacy and percentage humanness. Developability of clinical lead candidates was further confirmed in manufacturability assessment
studies.
Figure 42: Key results for TDP-43 antibodies program
Ref: AC Immune, AD/PD Conference, 2022
Neuroinflammation and the NLRP3 inflammasome pathway
Microglial cells are the main resident immune cells in the brain, which maintain a healthy environment by removing damaged cells and misfolded protein aggregates. When overstimulated, microglia can drive
neuroinflammation, leading to increased neuronal death and disease progression. A key molecular pathway that is activated by misfolded proteins related to neurodegenerative and other diseases, is the NLRP3 inflammasome, a multi-protein complex that
forms within microglia leading to production of pro-inflammatory factors that exacerbate neuronal atrophy. A critical component of the NLRP3 pathway is ASC (apoptosis-associated speck-like protein containing a C-terminal caspase recruitment
domain), which is formed and released by activated microglia. Intracellularly, ASC specks participate in the production of pro-inflammatory cytokines, whereas extracellular ASC specks cause acute inflammatory
reactions. ASC specks have been identified in microglia within the CNS of patients with NDD (Venegas, 2017) as well as patients’ body fluids.
As illustrated in Figure 43, pathological species of Abeta, Tau, a-syn and TDP-43 induce NLRP3 inflammasome activation and ASC speck formation. AC Immune is developing multiple small molecule and antibody-based
candidates with the potential to inhibit the NLRP3 pathway. Recent in vitro studies and in vivo experiments in animal models of AD, PD and ALS have validated this
approach.
Figure 43: Proteinopathies exacerbate NLRP3-driven neuronal damage and promotes further neurodegeneration
(1) Amyotrophic lateral sclerosis; (2) Frontotemporal lobar dementia; (3) TAR DNA-binding protein 43; (4) NOD-like receptor protein 3; (5) Apoptosis-associated speck-like protein containing a CARD, also PYCARD; (6)
Neurofibrillary tangle
Targeting NLRP3-ASC in neurodegenerative diseases
In AD, Abeta peptides, which accumulate to form the characteristic plaques in AD activate the NLRP3 inflammasome (Halle, 2008). The downstream pro-inflammatory factors, IL-1b and IL-18, increased in cells isolated in
these patients (Saresella, 2016). Further validation of these targets in AD involve crossing NLRP3 or ASC knockout mice to models of Abeta-driven pathology. In these models, neuroinflammation decreased and neuronal and memory function improved
(Heneka, 2013; Demspey, 2017; Venegas, 2017). Recently, ASC speck and IL-18 levels were shown to be higher in human Mild Cognitive Impairment (MCI) and AD brain samples indicating that ASC is a promising biomarker of MCI and AD (Scott, 2020).
In Parkinson’s disease, NLRP3 is activated and ASC formation is upregulated (Gordon, 2018 and Anderson, 2021). Exome sequencing analysis identified multiple single-nucleotide polymorphisms of NLRP3 including rs7525979,
which was associated with a significantly reduced risk of developing PD (von Herrmann, 2018). In vitro, NLRP3 inhibition decreases a-syn-mediated inflammasome activation in mouse microglial cells and extracellular ASC release. In multiple PD animal
models, targeting NLRP3 effectively mitigates motor deficits, nigrostriatal dopaminergic degeneration and accumulation of a-syn aggregates (Gordon 2018). Taken together, NLRP3 is responsible for driving neuroinflammation that results in progressive
dopaminergic neuropathology, highlighting NLRP3 as a potential target for PD disease-modifying treatments.
As illustrated in Figure 43, extracellular Tau activates NLRP3 and ASC formation in microglia. In patients with frontotemporal dementia, elevated cleavage of caspase-1, increased ASC levels and mature IL-1b are
observed (Ising, 2019). Furthermore, in preclinical models, injection of fibrillar Abeta induces Tau pathology in an NLRP3-dependent manner (Ising, 2019) and the absence of ASC or inhibition of NLRP3 decreases seeding by Tau in vivo and in vitro (Stancu, 2019). Finally, NLRP3 inhibition ameliorates inflammation and ER stress signaling in a model of Tau-driven pathology, as well as partially
normalizes phospho-tau levels (Hull, 2020).
Concerning ALS, TDP-43-mediated activation of microglia causes motor neuron cell death in vitro (Zhao, 2015) with downstream activation of NF-kB and NLRP3 (Clark, 2020) and
involves CD14. This finding is clinically relevant as increased CD14 expression by microglia is observed in postmortem spinal cord tissue from patients with ALS, a TDP-43-driven disease (Clark, 2020). Furthermore, wildtype and mutant forms of
TDP-43 activate microglia to generate IL-1b, which is abolished by NLRP3 inhibition (Deora, 2019).
Microglia isolated from the ALS mouse model, SOD1G93A, express elevated levels of NLRP3 (Deora, 2019). When microglia are incubated with soluble or aggregated SOD1G93A, NLRP3 is activated, ASC specks are formed and
IL-1b is secreted which is prevented by treatment with an NLRP3 inhibitor (Deora, 2019).
Our strategy for targeting the NLRP3-ASC inflammasome
AC Immune is aggressively pursuing this key pathway in order to reduce the unwanted progression of inflammation in diseases and syndromes caused by the hyper-activation of the NLRP3 inflammasome. Our aim is to develop
therapeutics that decrease production of pro-inflammatory factors yet maintain normal phagocytosis of debris and misfolded proteins as well as allow the function of other pathogen-sensing pathways. Currently, AC Immune is targeting the NLRP3-ASC
pathway using two complementary approaches, derived from our two technology platforms (Figure 44):
Figure 44: Strategy to use our dual proprietary technology platforms to target NLRP3-ASC
(1) NOD-like receptor protein 3; (2) Apoptosis-associated speck-like protein containing a CARD, also PYCARD
Ref: Adapted from Ransohoff et al., Nature 2017
Small molecule inhibitors of NLRP3
Leveraging our proprietary Morphomer platform, the Company has successfully identified and filed patent applications for various chemical series of potent small molecule NLRP3 inhibitors. The Company has established
biological activity for these compounds in multiple functional assays (Figures 45 and 46), and initial animal studies show highly potent target inhibition in a model of peripheral inflammation (Figure 47), providing the first evidence of in vivo activity. AC immune is currently evaluating potential lead compounds for further in vivo efficacy and optimization for CNS delivery.
Figure 45: Screening assay to quantify the compound-mediated inhibition of IL-1β production in vitro using human microglia
(1) NOD-like receptor protein 3; (2) Interleukin 1 beta
Ref: Adapted from Choi et al., Mol Cell 2014
In the figure above, the left panel illustrates the signal transduction pathway leading to NLRP3 inflammasome activation. The right panel shows the dose dependent inhibition by a small molecule candidate (cmpd 1)
and reference molecule (Ref) of the NLRP3 pathway post stimulation with monosodium urate (MSU) crystal that induced interleukin-1β production by human macrophages. IC50 (inhibition concentration at 50%); DMSO (negative vehicle control) (Ref: AC
Immune unpublished data).
Figure 46: Secondary assays involving human whole blood demonstrate potent hit compounds active in vitro using multiple donors
(1) NOD-like receptor protein 3; (2) Interleukin 1 beta; (3) Bioluminescence Resonance Energy Transfer
Ref: AC Immune unpublished data
Figure 47: In a mouse model of peritonitis, several of the initial hits targeting NLRP3 show significant inhibition of IL-1β production in vivo
(1) NOD-like receptor protein 3; (2) Interleukin 1 beta; (3) Bacterial lipopolysaccaride
Ref: AC Immune unpublished data
Therapeutic antibodies for neuroinflammation (mAb-ASC)
It has been shown in the APP/PSI mouse model of AD, intracellular and extracellular ASC specks are present. Treatment using an anti-ASC antibody decreases the Abeta load in these mice (Figure 48).
Figure 48: ASC specks in AD patients and mouse model of AD
(1) Apoptosis-associated speck-like protein containing a CARD; (2) Amyloid precursor protein/presenilin 1
Ref: Vanegas et al., Nature 2017
Using our SupraAntigen platform, AC Immune generated a novel anti-ASC monoclonal antibodies. It binds to human and mouse ASC specks with picomolar affinity and shows specific target engagement on human and mouse
macrophages (arrows in the immunofluorescence images, Figure 49). In addition, western blot experiments demonstrated target engagement on ASC specks obtained or purified from recombinant mouse (Rec Mouse) and recombinant human (Rec Human) while
target specificity was confirmed in human macrophages where ASC is genetically knocked down (no band for THP-1 ASC KO; Figure 49). Selected antibodies are currently being evaluated in in vivo
proof-of-concept studies using animal models of human disease. These have been initiated in Q4 2021 with data estimated by H2 2022 to validate ASC specks as targets. This would narrow the antibody candidates for lead declaration. These innovative,
potentially disease-modifying antibodies are designed to have the highest potential to prevent inflammation and modify the downstream exacerbation of various proteinopathies.
Figure 49: Neutralizing anti-ASC antibodies that bind extracellular human ASC and potently inhibit inflammation-mediated formation of ASC specks
(1) Apoptosis-associated speck-like protein containing a CARD; (2) monoclonal antibodies
Ref: AC Immune unpublished data
TDP-43 imaging diagnostics
To complement our pipeline of PET imaging tracers, we also selected TDP-43 as a third target. TDP-43 in its physiological function is a protein regulating mRNA splicing, stability and translation as well as gene
transcription. Similar to Tau, Abeta and a-syn, TDP-43 misfolds in TDP-43 proteinopathies into insoluble aggregates predominantly in the cytoplasm of neurons, leading to cellular dysfunction and eventually clinical symptoms. TDP-43 pathology often
appears in other neurodegenerative diseases (e.g., AD) as a part of mixed pathologies, and it has been proposed that misfolded TDP-43 contributes to the observed clinical phenotype in addition to the primary pathology. The precise molecular
diagnosis and differentiation of early stages of such diseases is of critical importance. Using proprietary assays, a set of small molecular weight compounds from four chemically distinct series were identified, which bind to patient-derived
pathological TDP-43. Several of these compounds demonstrated favorable pharmacokinetic profiles in rodents suggesting suitable properties for further development as PET ligands. We identified candidates showing nanomolar affinities on TDP-43
aggregates enriched from patients with TDP-43 proteinopathies. Selected compounds show target engagement on FTLD-TDP brain sections by high resolution autoradiography. Affinity and selectivity are being further optimized to deliver a potential
first-in-class PET tracer for TDP-43.
Figure 50: First-in-class TDP-43 PET imaging tracer – Discovery Phase
Ref: AC Immune, AD/PD Conference, 2022
There are no imaging products in the market today targeting TDP-43. This provides us with a unique opportunity to become the first company to provide a TDP-43-PET tracer to the market. We believe the ability to image
TDP-43 deposits in the brain will enable fundamental change in the approach toward treating primary and secondary TDP-43 proteinopathies including improved design for AD clinical trials to provide the best outcome for patients.
License agreements and collaborations
Our SupraAntigen and Morphomer platforms have generated large numbers of clinical assets that address multiple diseases related to protein misfolding. Selected key assets in the product pipeline have been licensed for
upfront payments, milestones and royalties to help offset the cost of our research and internal product development. Discussions with other companies are ongoing. We have signed a number of licensing agreements with leading pharmaceutical companies
to assist and accelerate the development of our product pipeline, including:
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a worldwide licensing agreement with Genentech signed in November 2006 (and amended in March 2009, January 2013, May 2014 and May 2015) for crenezumab for AD, under which we may become eligible to receive payments potentially greater
than USD 340 (CHF 314) million, excluding royalties;
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a worldwide licensing agreement with Genentech signed in June 2012 (and amended in December 2015) for anti-Tau antibodies to treat AD and potentially other indications, under which we may become eligible to receive payments potentially
greater than CHF 400 million, excluding royalties;
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a worldwide licensing agreement with Janssen signed in December 2014 (and amended in April 2016, July 2017, January 2019 and November 2019) for therapeutic anti-Tau vaccines for AD, and potentially other Tauopathies, under which we may
become eligible to receive payments totaling up to CHF 500 million, excluding royalties;
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a worldwide licensing and collaboration agreement (LCA) with LMI (formerly Piramal Imaging SA) signed in May 2014 for small-molecule Tau ligands for use as PET tracers under which we may become eligible to receive payments totaling up to
EUR 160 (CHF 167) million, excluding royalties; and
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a worldwide license agreement with Lilly to research and develop Morphomer Tau small molecules for the treatment of AD and other neurodegenerative diseases, which was entered into in December 2018 (and amended in September 2019 and March
2020). The agreement was deemed effective on January 23, 2019. Under this, we may become eligible to receive payments up to approximately CHF 1.9 billion, excluding royalties.
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Further information concerning details of our agreements and collaborations can be found under “Item 5: Operating and financial review and prospects.”
Competition
The pharmaceutical and biopharmaceutical industries are highly competitive across all therapeutic fields. In the field of neurodegenerative diseases, there are many public and private companies or institutions that are
actively engaged in the discovery and development of therapeutic and diagnostic products. Some of these products may have a similar target to our product candidates or address similar markets. The industry is still in its infancy in terms of
defining the pathology of neurodegenerative diseases. As disease understanding progresses, the number of novel product candidates may well increase and broaden the therapeutic and diagnostic options in our product markets.
Currently, there is only one approved disease-modifying product for AD. Most currently approved therapies seek to treat the symptoms of AD, such as cognitive decline, but do not slow or stop the progression of the
disease. In addition, commonly, there is off-label prescription of antidepressant and antipsychotic agents for more patients with advanced AD who may have agitation, aggressive behaviors, psychosis and depression.
We expect there to be several classes of disease-modifying agents that will enter the AD market. Among our monoclonal antibodies, there are semorinemab targeting extracellular Tau and crenezumab targeting Abeta
oligomers. Therapeutic vaccines are a second class of disease-modifying therapies, and include our candidate products ACI-35.030, which targets aggregated, phosphorylated Tau protein and ACI-24, which targets oligomeric Abeta. A third class of
disease-modifying therapies, small molecules, include our Morphomer Tau program, which inhibits Tau aggregates.
The availability of novel diagnostic agents to visualize the disease development in patients with AD is critical for successful clinical development of disease-modifying products in AD. At the forefront of this new
diagnostic effort are PET agents for imaging of disease pathology, and in particular, Tau-targeting PET agents, which we believe will allow precise assessment of disease in patients with AD. A similar situation is developing in other NDD, such as
PD, where PET imaging is becoming available.
ACI-35.030. ACI-35.030, if approved, would compete with other approved Tau-targeting therapeutic vaccines. This includes the AADvac1 vaccine developed by Axon
Neuroscience, which completed a Phase 2 study in 2019.
ACI-24 for AD. ACI-24, if approved, would compete with other approved anti-Abeta-targeting therapeutic vaccines. This includes the ABvac 40 (Araclon Biotech),
which is currently being evaluated in a Phase 2 study and UB-311(Vaxxinity), which has completed a Phase 2a study. In addition, ABvac 42 (Araclon Biotech) has completed a Phase 1 study and ALZ-101 (Alzinova) is currently being evaluated in a Phase
1b study.
ACI-24 for DS. ACI-24 is the first disease-modifying vaccine candidate addressing DS-related AD, with a potential preventive and therapeutic application.
Although there are symptomatic treatments of DS in clinical development, to our knowledge there are currently no other disease-modifying treatments in clinical development for AD in DS.
ACI-7104. ACI-7104, if approved, would compete with other approved a-syn-targeting therapeutic vaccines. This includes the UB-312 vaccine developed by
Vaxxinity, which is being evaluated in a Phase 1 study.
Semorinemab. Semorinemab is one of several Tau-targeting monoclonal antibodies in development to potentially act as disease-modifying agents. Bepranemab
(UCB/Roche) and JNJ-63733657 (Janssen) are being evaluated in Phase 2 studies. BIIB076 (Biogen/Neuroimmune), Lu AF87908 (Lundbeck), PNT001 (Pinteon Therapeutics), E-2814 (Eisai) and PRX005 (Prothena/BMS) are being evaluated in Phase 1 studies.
Crenezumab. Crenezumab is the first monoclonal antibody candidate that targets Abeta in cognitively healthy individuals at risk of developing familial AD.
However, Lilly’s solanezumab, Roche’s gantenerumab, lecanemab (BioArctic/Eisai) and donanemab (Eli Lilly) are being evaluated in studies of presymptomatic AD. ADUHELM (Biogen) has been approved by FDA under the accelerated approval pathway for the
treatment of patients with mild cognitive impairment and mild dementia.
Morphomer Tau. AC Immune has developed the first small molecule targeting aggregated Tau with high selectivity for the target. In collaboration with Lilly,
this molecule (ACI-3024) was studied in a Phase 1 clinical trial which was completed in 2020 as a first-in-class, Tau-specific, disease-modifying, Tau aggregation inhibitor small molecule for the treatment of neurodegenerative diseases
characterized by misfolded Tau. Together with our partner Eli Lilly, we have identified optimized candidates that will now be prioritized for Alzheimer’s disease development. The optimized candidates have been shown to have enhanced brain uptake,
good safety profiles and high affinity for Tau. These new candidates are being further characterized in in vivo preclinical models and will be advanced into IND-enabling studies, and one of them is expected
to advance into development in 2022. ACI-3024 will continue to be investigated in Orphan indications.
Tau-PET tracer. Tauvid (previously known as Flortaucipir) was developed by Eli Lilly and approved by FDA in May 2020. However, should PI-2620 be approved, it
would also compete with (i) APN-1607 (previously known as 18F-PM-PBB3), a product candidate in a Phase 2 study and being advanced by Aprinoia; (ii) 18F-MK-6240, which is being evaluated by Cerveau/Merck in a Phase 2 clinical trial in patients with
ADAD; (iii) 18F-GTP1, which is being developed by Genentech and is in a Phase 2 study in subjects at risk of developing ADAD, (iv) 18F-RO6958948, for which Roche has completed a Phase 1 study in patients with AD and (v)18F-JNJ-067, for which
Janssen has completed a Phase 1 study in patients with AD.
A-syn-PET tracer. To our knowledge, there are no a-syn PET tracers in the clinic
A-syn. Several a-syn antibodies are currently in development; Roche/Prothena entered a Phase 2 with prasinezumab in June 2017 and in May 2021, began a Phase
2b study in PD patients with more advanced symptoms; ; Astra Zeneca/Takeda started a Phase 1 study in patients with Parkinson’s disease with MEDI1341 in August 2020; Lundbeck/Genmab entered a Phase 2 in Multiple System Atrophy (MSA) with Lu AF82422
in November 2021; AbbVie/BioArctic is preparing for a Phase 2 study with ABBV-0805; and UCB7853 (UCB/Novartis) entered a Phase 1 study in December 2020.
TDP-43 antibodies. To our knowledge, there are no TDP-43 antibodies in the clinic.
Many of our competitors have significantly greater financial, technical and human resources than we have available. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more
resources being concentrated among a smaller number of our competitors. Our commercial opportunities and our success will be based in part on our ability to identify, develop and manage a portfolio of product candidates that are safer and more
effective than competing products. However, this opportunity could be eroded or even eliminated if our competitors develop and/or market products that are novel and have superior safety and efficacy profiles, that may be brought to the market more
rapidly due to greater available resources, or that are less costly than our current or future product candidates.
Commercialization strategy
Our strategy to date has been to focus on identifying partnerships for our early-stage product candidates as both a way to secure non-dilutive capital to fund our other research and development programs and also as a
way to accelerate the development of these partnered products by leveraging our partners’ extensive knowledge in clinical studies, drug development, manufacturing and commercialization.
With greater financial resources at our disposal and the significant knowledge acquired by our scientists and scientific leadership, we intend to retain selected promising product candidates in-house for a longer
period of time and fund their development from our own resources. This will allow us to generate greater value from these product candidates, allowing us to demand more significant terms from a prospective partner. For example, while we plan to
seek a strategic partner for our Abeta vaccine program in AD, our current plan is to retain full control of this asset for development in the DS population. We will commence an upcoming Phase 2 study for AD before potentially partnering this
program and intend to fund further clinical development in DS from our own financial resources. In the field of diagnostics, the parallel development of therapeutic compounds and companion diagnostics is of growing importance to the pharmaceutical
and biopharmaceutical industries. The development timeframe of a PET diagnostic agent is significantly shorter than for a therapeutic product, providing the prospect for potential diagnostic product revenues to be realized quicker than potential
therapeutic product revenues. Our Morphomer platform is particularly well suited to generate molecules for use in the development of companion diagnostics.
Given our current stage of product development, we currently do not have a commercialization infrastructure. If any of our product candidates is granted marketing approval, we intend to focus our initial commercial
efforts in the US and select European markets, which we believe represent the largest market opportunities for us. In those markets, we expect our commercial operations to include our own specialty sales force that will target Neurologists and
Gerontologists, both in hospitals and in private practice. In other markets, we expect to seek partnerships that would maximize our products’ commercial potential.
Intellectual property
We strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining US and foreign patents intended to cover our products and compositions, their methods of
use and processes for their manufacture, and our proprietary technology platforms, diagnostic candidates and any other inventions that are commercially important to the development of our business. We also rely on trade secrets and know-how to
protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.
Our success will significantly depend on our and our collaboration and licensing partners’ ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and
know-how related to our business, to defend and enforce patents, to preserve the confidentiality of our trade secrets and to operate our business without infringing any patents and other intellectual property or proprietary rights of third parties.
See the section titled “Risk factors— Risks related to intellectual property” for additional information.
As of December 31, 2021, we owned or co-owned with our collaboration and licensing partners, approximately 44 issued US patents and 363 issued patents in other jurisdictions, as well as 27 pending US patent
applications and 519 pending foreign patent applications. As of December 31, 2021, we licensed approximately 28 issued US patents and 257 issued patents in other jurisdictions, as well as 19 pending US patent applications and 333 pending foreign
patent applications.
The patent portfolios for our most advanced product candidates as of December 31, 2021 are summarized below:
Anti-Tau vaccines
Our patent portfolio for anti-Tau vaccines includes a patent family with composition-of-matter claims (including claims directed to the ACI-35 antigenic peptide and a pharmaceutical composition comprising such an
antigenic peptide), claims directed to treating certain indications using ACI-35 including AD, and claims directed to using ACI-35 to induce an immune response. This patent family currently contains approximately 28 issued patents and two pending
patent applications in 27 countries. The issued patents in this patent family, if the appropriate maintenance, renewal, annuity or other governmental fees are paid, are expected to expire in 2030, excluding any additional term for patent term
adjustments or patent term extensions.
Our patent portfolio for anti-Tau vaccines also includes a patent family relating to therapeutic Tau vaccine claims (including claims directed to a pharmaceutical composition comprising an antigenic Tau peptide),
claims directed to using such vaccines to induce an immune response in a subject, and claims directed to methods for preventing or treating a neurodegenerative disease or disorder, including AD, among others. This patent family currently contains 1
issued patent and approximately forty pending patent applications in 38 countries. The issued patent and any patents issuing in this patent family, if the appropriate maintenance, renewal, annuity or other governmental fees are paid, are expected
to expire in 2038, excluding any additional term for patent term adjustments or patent term extensions.
ACI-24
Our patent portfolio for ACI-24 includes a patent family with composition-of-matter claims (including claims directed to the ACI-24 antigenic construct), claims directed to treating certain indications using ACI-24
including AD, and claims directed to using ACI-24 to induce an immune response. This patent family currently contains approximately 26 issued patents and 8 pending patent applications in 30 countries. With respect to the US, we own two issued US
patents. The issued patents in this patent family, if the appropriate maintenance, renewal, annuity or other governmental fees are paid, are expected to expire in 2026, excluding any additional term for patent term adjustments or patent term
extensions.
Our patent portfolio for ACI-24 also includes a patent family directed to the use of the ACI-24 vaccine in the treatment and/or prevention of memory and/or cognitive impairments or abnormalities in the DS population,
among others. As of December 31, 2021, in this patent family, we owned approximately 12 issued patents and 6 pending patent applications in 18 countries. Issued patents in this patent family, if the appropriate maintenance, renewal, annuity or
other governmental fees are paid, are expected to expire in 2032, excluding any additional term for patent term adjustments or patent term extensions.
Our patent portfolio for ACI-24 also includes a patent family relating to therapeutic anti-Abeta vaccine claims (including claims directed to a pharmaceutical composition comprising an antigenic peptide), and claims
directed to using such vaccines in treating, preventing, inducing a protective immune response against or alleviating the symptoms associated with an Abeta-associated disease in a subject, among others. This patent family currently contains one
issued US patent and approximately 33 pending patent applications in 32 countries. Any issued patents in this patent family, if the appropriate maintenance, renewal, annuity or other governmental fees are paid, are expected to expire in 2039,
excluding any additional term for patent term adjustments or patent term extensions.
ACI-7104
Our patent portfolio relating to ACI-7104 includes patents and patent applications with composition-of-matter claims (including claims directed to the peptide, as well as pharmaceutical formulations comprising the
peptide), and claims directed to the use of compounds comprising the peptide in treating or preventing synucleinopathies including PD and MSA.
Our patent portfolio relating to ACI-7104 includes patents and patent applications that we own in two different patent families. As of December 31, 2021, in these patent families, we owned approximately 14 issued
patents and 15 pending patent applications, in 11 countries. With respect to the US, we owned two issued US patents. Issued patents in the basic patent family, if the appropriate maintenance, renewal, annuity or other governmental fees are paid,
are expected to expire in 2029, excluding any additional term for patent term adjustments or patent term extensions.
Semorinemab
Our global patent portfolio relating to semorinemab includes patents and patent applications with claims directed to compositions of matter, methods of treatment for certain indications including AD, and methods of
use, among others.
Crenezumab
Our patent portfolio relating to crenezumab includes patents and patent applications with claims directed to composition of matter (including claims directed to the crenezumab antibody or a fragment thereof, a
polynucleotide encoding the crenezumab antibody or a fragment thereof, a cell line used to produce the crenezumab antibody as well as pharmaceutical compositions comprising the crenezumab antibody), claims directed to treating certain indications
using the crenezumab antibody including AD, claims directed to a method of manufacturing the crenezumab antibody and claims directed to diagnostic and prognostic uses of the crenezumab antibody.
Our patent portfolio relating to crenezumab includes patents and patent applications that we own or co-own in four different patent families. As of December 31, 2021, we owned or co-owned approximately 49 patents (not
including the patents in the individual countries where the issued European patent was validated) and 15 patent applications in 34 countries in our main patent family directed to the crenezumab antibody and methods of using the crenezumab antibody
to treat certain indications, including AD. This patent portfolio includes three issued US patents and one pending US patent applications, which, if the appropriate maintenance or other governmental fees are paid, are expected to expire in 2027,
excluding any additional term for patent term adjustments or patent term extensions. This patent portfolio also includes a PCT patent application that was filed on July 13, 2007. If the appropriate maintenance, renewal, annuity, or other
governmental fees are paid, national-stage applications issuing from this PCT patent application are expected to expire in 2027, excluding any additional term for patent term adjustments or patent term extensions, as applicable.
Morphomer Tau
Our patent portfolio relating to Morphomer Tau therapeutics includes patent applications with claims directed to composition of matter (including claims directed to the molecule, a pharmaceutical composition comprising
such molecule and a mixture comprising such molecule), and claims directed to prevention and treatment of certain indications using such molecules including AD and PSP, among others.
Our patent portfolio relating to the Morphomer Tau therapeutic program includes patent applications that we own or co-own in four different patent families. As of December 31, 2021, we owned or co-owned approximately
49 pending patent applications and one US issued patent in our main patent family directed to the ACI-3024 small molecule Tau aggregation inhibitor. If the appropriate maintenance, renewal, annuity, or other governmental fees are paid,
national-stage applications issuing from this PCT patent application are expected to expire in 2039, excluding any additional term for patent term adjustments or patent term extensions, as applicable.
PI-2620
Our patent portfolio relating to PI-2620 includes patent applications with claims directed to composition of matter (including claims directed to the molecule, its precursor and a diagnostic composition comprising such
molecule), claims directed to diagnosis of certain indications using PI-2620 including AD and PSP, and claims directed to a method of manufacturing PI-2620, among others.
Our patent portfolio relating to PI-2620 includes patent applications that we own or co-own in three different patent families. As of December 31, 2021, we owned or co-owned 2 patents and approximately 14 patent
applications in 16 countries in our main patent family directed to the PI-2620 molecule, its precursor and methods of using the PI-2620 to diagnose certain indications, including AD and PSP. This main patent family includes one issued US patent If
the appropriate maintenance, renewal, annuity, or other governmental fees are paid, national-stage applications issuing from this PCT patent application are expected to expire in 2037, excluding any additional term for patent term adjustments or
patent term extensions, as applicable.
A-syn PET Tracer
Our patent portfolio relating to a-syn diagnostics includes composition of matter claims (including claims directed to the ACI-12589 molecule, its precursor, and diagnostic compositions comprising the molecule), and
claims directed to use of the molecule in imaging and in diagnostics of a-synucleinopathies including PD and MSA.
Our patent portfolio relating to a-syn diagnostics includes patents and patent applications that we own in three different patent families. If the appropriate maintenance, renewal, annuity or other governmental fees
are paid, any issued patents are expected to provide protection up to 2041, excluding any additional term for patent term adjustments or patent term extensions, as applicable.
Manufacturing and supply
We do not own or operate facilities for the manufacture, packaging, labeling, storage, testing or distribution of preclinical or clinical supplies of any of our product candidates. We instead contract with and rely on
third-party CMOs to manufacture, package, label, store, test and distribute all preclinical development and clinical supplies of our product candidates, and we plan to continue to do so for the foreseeable future. We have established relationships
with CMOs such as WuXi AppTec (WuXi STA), WuXi Biologics, Avecia, Almac Clinical Services, Bachem AG, Evonik Industries AG, Polymun Scientific Immunbiologische Forschung GmbH, piCHEM Forschungs-und Entwicklungs GmbH, Baccinex SA, Solvias AG and
Pfenex Inc. among others.
Compliance with governing rules and quality requirements
The facilities used by our collaboration partners and CMOs to manufacture our product candidates are systematically audited by local authorities and occasionally inspected by competent authorities where the clinical
studies are ongoing. The facilities where the commercial productions are performed will have to be approved by the FDA or other relevant regulatory authorities, pursuant to inspections that are conducted after we submit our NDA or comparable
marketing applications. We perform periodic quality audits of the manufacturing facilities and CMOs to monitor their compliance with the regional laws, regulations and applicable cGMP standards and other laws and regulations, such as those related
to environmental health and safety matters. The scope of our audits also involves monitoring the ability of our providers to maintain adequate QCs and QA systems including personnel qualification.
After manufacturing, our products are submitted to extensive characterization and QC testing plans performed by using properly developed analytical methods that are qualified or validated; this ensures the accuracy of
the results generated and provides evidence of the quality of our products. In addition, our products are submitted to detailed and standardized stability programs aimed at demonstrating product stability during the storage period; this, in
addition to guaranteeing the safety of the products, supports the definition of a suitable supply chain that may encompass the distribution of the products in different continents.
Contractual framework
We have established, with CMOs supplying active pharmaceutical ingredients, drug substances or drug products under cGMP, quality agreements and master service agreements. Quality agreements define the quality standards
required to develop, produce and supply the product, and also define the responsibilities related to the collaboration with regards to the quality related aspects. Manufacturing service agreements define the commercial and financial framework under
which product manufacturing under cGMP is performed. Any failure to achieve and maintain compliance with the laws, regulations and standards, suspension of the manufacturing of our product candidates or revoke of cGMP permissions, which would
adversely affect our business and reputation, are defined in the master service agreements and quality agreements. The risk that any third-party providers may breach the agreements they have with us because of factors beyond our control and the
possibility that they may also terminate or refuse to renew their agreements because of their own financial difficulties or business priorities, potentially at a time that is costly or otherwise inconvenient for us, is managed by us with constant
investments toward maintaining reserve stocks and in-depth process know-how. The latter is supported by continuous in-house process development and production activities of small-scale/research grade materials, which may offer the chance to rapidly
identify alternative contract manufacturers to whom the manufacturing process could be transferred providing continuity for the clinical study.
Interaction with CMOs
Finally, our partnerships with CMOs are managed through an efficient project management platform in which teams are formed with the representatives of each key function from both parties. Meetings occur either through
telephone conferences aimed at updating short-term actions or face-to-face conferences when mid- to long-term development plans are discussed.
Government regulation and our regulatory department
Our regulatory department has a strong culture of regulatory compliance, operating under three guiding principles, to:
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provide constructive regulatory input for development products;
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ensure smooth regulatory approvals by anticipating hurdles; and
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build confidence with regulators by continuous communication.
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The QA group is included within the regulatory department with the mission to:
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create and maintain a corporate quality management system; and
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ensure cGCP, cGMP, cGLP and current Good Distribution Practice (cGDP) compliance.
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A science-driven approach is the cornerstone of our interactions and this has helped us to build and maintain a high level of trust with regulators. Besides informal conversations with the authorities, our regulatory
department has conducted several pre-Investigational New Drug (pre-IND), Type B and Type C meetings with the FDA (ACI-24 for AD and DS, ACI-7104 and PI-2620) and Scientific Advice meetings, which are the European equivalent of pre-IND meetings
(with the German Paul-Ehrlich-Institut, Swedish Medical Products Agency; UK Medicine & Healthcare Products Regulatory Agency, Finnish Medicines Agency, the Spanish Agency of Medicines and Medical Devices and the EMA). Since 2008, our regulatory
department has filed a total of 19 clinical trial applications in the EU (one each in Austria, Denmark, the Netherlands and Poland, two in Germany, three in Sweden, four in Finland and five in the UK) and 4 INDs in the US. Given the seriousness of
AD and public pressure for new therapeutics, we consider regulatory agencies to be important stakeholders in our product development strategies. We are committed to working closely with global regulatory authorities to adhere to and achieve the
highest levels of safety and quality of our product candidates in the most timely and efficient manner. The transparency we have achieved and our goal of a close working relationship with the regulatory agencies, in particular the FDA and the EMA,
are intended to facilitate expeditious execution through the regulatory approval process.
Our regulatory department contains a QA group. As every quality issue ultimately requires regulatory involvement and input, this approach is intended to lead to rapid resolution of issues and ensure full compliance to
satisfy both the reviewers and the inspectors at the government health authorities. Our regulatory department is charged with keeping our entire organization, directly or indirectly involved in the clinical study application process, in a state of
“inspection readiness.” To that end, we ensure that the Trial Master Files are complete and regularly updated. Our regulatory department is also tasked with generating our annual quality plan. The personnel tasked with QA have issued a set of
approximately 90 standard operating procedures and working instructions and continuously train the relevant staff. Our QA personnel conduct regular audits, including in-person audits of the contract manufacturers, contract research organizations
and laboratories conducting primary endpoint analysis. In addition, we have a full-time QA documentation assistant to ensure good documentation practice and archiving.
Product approval process
The clinical studies, manufacturing, labeling, storage, distribution, record-keeping, advertising, promotion, import, export and marketing, among other things, of our product candidates are subject to extensive
regulation by governmental authorities in the US and other countries. The US FDA, under the Federal Food, Drug, and Cosmetic Act (FDCA), regulates pharmaceutical products in the US. The steps required before a drug may be approved for marketing in
the US generally include:
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the completion of preclinical laboratory tests and animal tests conducted under cGLP regulations;
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the submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical studies commence;
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obtaining a positive opinion from the ethics committee (Europe)/institutional review board (US) to commence study on human subjects;
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the performance of adequate and well-controlled human clinical studies to establish the safety and efficacy of the product candidate for each proposed indication and conducted in accordance with cGCP requirements;
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pre-NDA submission meeting with FDA (highly recommended);
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the submission to the FDA of an NDA;
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the FDA’s acceptance of the NDA;
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satisfactory completion of an FDA Pre-Approval Inspection (PAI) of the manufacturing facilities at which the product is made to assess compliance with cGMP requirements;
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the FDA’s review and approval of an NDA prior to any commercial marketing or sale of the drug in the US; and
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having parallel scientific advice from the EMA or Health Technology Assessment body whereby the payors are involved at the outset (Phase 2), which is intended to facilitate the design of clinical studies to target primarily populations
with a high chance of obtaining reimbursement and accelerate the process of time to reimbursement.
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The FDA has various programs, including Fast Track, Priority review, Accelerated Approval and Breakthrough Therapy designation, which are intended to increase agency interactions, expedite or facilitate the process for
reviewing product candidates, and/or provide for initial approval based on surrogate endpoints. We believe that one or more of our product candidates may qualify for some of these expedited development and review programs. However, even if a
product candidate qualifies for one or more of these programs, the FDA may later decide that the product candidate no longer meets the conditions for qualification.
The Fast Track program is intended to expedite or facilitate the process for reviewing new drugs that meet certain criteria. Specifically, new drugs are eligible for Fast Track designation if they are designed to treat
a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the product and the specific indication for which it is being studied. The
sponsor of a new drug may request the FDA to designate the drug as a Fast Track product at any time during the clinical development of the product. AD, for example, meets both pre-requisites—it is life-threatening and constitutes an unmet medical
need. Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted if the sponsor provides a schedule for the submission of the sections of the
application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the application.
Any product submitted to the FDA for marketing, including under a Fast Track program may be eligible for other types of FDA programs intended to expedite development and review, such as Priority Review and Accelerated
Approval. Any product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy exists or it provides a significant improvement in the treatment, diagnosis or prevention
of a disease compared with marketed products. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug designated for Priority Review to facilitate the review. Additionally, a product may be eligible
for the Accelerated Approval program. Product candidates that are studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive
Accelerated Approval, which means that they may be approved on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit,
or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a condition of approval, the FDA may require that a sponsor of a drug receiving Accelerated Approval perform adequate and well-controlled
post-marketing clinical studies. Failure to conduct required post-approval trials, or the inability to confirm a clinical benefit during post-marketing trials, may allow the FDA to withdraw the drug from the market on an expedited basis. In
addition, as a condition for Accelerated Approval the FDA currently requires pre-approval of promotional materials, which could adversely impact the timing of the commercial launch of the product. The Fast Track, Priority Review and Accelerated
Approval programs do not change the standards for approval but may expedite the development or approval process.
The Food and Drug Administration Safety and Innovation Act of 2012 also amended the FDCA to require the FDA to expedite the development and review of a breakthrough therapy. A drug can be designated as a breakthrough
therapy if it is intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that it may demonstrate substantial improvement over existing therapies in one or more clinically significant
endpoints. A sponsor may request that a drug be designated as a breakthrough therapy at any time during the clinical development of the product. If so designated, the FDA shall act to expedite the development and review of the product’s marketing
application, including by meeting with the sponsor throughout the product’s development, providing timely advice to the sponsor to ensure that the development program to gather nonclinical and clinical data is as efficient as practicable, involving
senior managers and experienced review staff in a cross-disciplinary review, assigning a cross-disciplinary project lead for the FDA review team to facilitate an efficient review of the development program and to serve as a scientific liaison
between the review team and the sponsor, and taking steps to ensure that the design of the clinical trials is as efficient as practicable.
The testing and approval process requires substantial time, effort and financial resources, and the receipt and timing of any approval is uncertain. Given this paradigm, AD has been given Life-Threatening Disease
status by the FDA and therefore AD therapies are eligible for the expanded access program for investigational drugs and other pathways such as Breakthrough Therapy, Accelerated Approval and Priority Review. Additionally, a single well-designed,
well-conducted, pivotal clinical study could be sufficient to trigger market approval pending a successful PAI.
Preclinical studies include laboratory evaluations of the product candidate, as well as animal studies to assess the potential safety and efficacy of the product candidate. The results of the preclinical studies,
together with manufacturing information and analytical data, are submitted to the FDA as part of the IND, which must become effective before clinical studies may be commenced. The IND will automatically become effective 30 days after receipt by the
FDA, unless the FDA raises concerns or questions about the conduct of the studies as outlined in the IND prior to that time. In this case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical studies can proceed.
Clinical studies involve the administration of the product candidates to healthy volunteers or patients with the disease to be treated under the supervision of a qualified principal investigator. Clinical studies are
conducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety and the efficacy criteria to be evaluated. A protocol for each clinical study and any subsequent protocol
amendments must be submitted to the FDA as part of the IND. Further, each clinical study must be reviewed and approved by an independent IRB, either centrally or individually at each institution at which the clinical study will be conducted. The
IRB will consider, among other things, ethical factors, the safety of human subjects and the possible liability of the institution. There are also requirements governing the reporting of ongoing clinical studies and clinical study results to public
registries. The FDA, the IRB or the clinical study sponsor may suspend or terminate clinical studies at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk. Additionally,
some clinical studies are overseen by an independent group of qualified experts organized by the clinical study sponsor, known as a Data Safety Monitoring Board/Committee. This group provides authorization for whether or not a study may move
forward at designated checkpoints based on access to certain data from the study. We may also suspend or terminate a clinical study based on evolving business objectives and/or competitive climate.
Clinical studies are typically conducted in three sequential phases prior to approval, but the phases may overlap. These phases generally include the following:
Phase 1. Phase 1 clinical studies represent the initial introduction of a product candidate into human subjects, frequently healthy volunteers. In Phase 1, the product candidate is usually tested for safety, including
adverse effects, dosage tolerance, absorption, distribution, metabolism, excretion and pharmacodynamics.
Phase 2. Phase 2 clinical studies usually involve studies in a limited patient population to (i) evaluate the efficacy of the product candidate for specific indications, (ii) determine dosage tolerance and optimal
dosage, and (iii) identify possible adverse effects and safety risks.
Phase 3. If a product candidate is found to be potentially effective and to have an acceptable safety profile in Phase 2 studies, the clinical study program will be expanded to Phase 3 clinical studies to further
demonstrate clinical efficacy, optimal dosage and safety within an expanded patient population at geographically dispersed clinical study sites.
Phase 4. Phase 4 clinical studies are conducted after approval to gain additional experience from the treatment of patients in the intended therapeutic indication and to document a clinical benefit in the case of drugs
approved under Accelerated Approval regulations, or when otherwise requested by the FDA in the form of post-marketing requirements or commitments. Failure to conduct any required Phase 4 clinical studies promptly could result in withdrawal of
approval.
The results of preclinical studies and clinical studies, including negative or ambiguous results as well as positive findings, together with detailed information on the manufacture, composition and quality of the
product, are submitted to the FDA in the form of an NDA requesting approval to market the product. The NDA must be accompanied by a significant user-fee payment. The FDA has substantial discretion in the approval process and may refuse to accept
any application or decide that the data is insufficient for approval and require additional preclinical, clinical or other studies.
We estimate that it generally takes 10 to 15 years, or possibly longer, to discover, develop and bring to market a new pharmaceutical or biopharmaceutical product in the US. Several years may be needed to complete each
phase, including discovery, preclinical, Phase 1, 2 or 3, or marketing authorization.
In addition, under the Pediatric Research Equity Act, an NDA or supplement to an NDA must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric
subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. Recently, the Food and Drug Administration Safety and Innovation Act (FDASIA), which was signed into law on July
9, 2012, amended the FDCA. The FDASIA requires that a sponsor who is planning to submit a marketing application for a drug or biological product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route
of administration submit an initial Pediatric Study Plan within 60 days of an end-of-Phase-2 meeting or as may be agreed between the sponsor and the FDA. The initial Pediatric Study Plan must include an outline of the pediatric study or studies
that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric
assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach agreement on the Pediatric Study Plan. A sponsor can submit amendments to an
agreed-upon initial Pediatric Study Plan at any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early-phase clinical trials, and/or other clinical development programs.
The cost of preparing and submitting an NDA is substantial. Under federal law, NDAs are subject to substantial application user fees and the sponsor of an approved NDA is also subject to annual product and
establishment user fees. Under the Prescription Drug User Fee Act (PDUFA), as amended, each NDA must be accompanied by a user fee. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA VI eliminates fees for supplements as well as for
establishments, although applicants will be assessed for annual prescription drug program fees for prescription drug products, rather than the prescription drug product fee assessed under the previous iteration of PDUFA. According to the FDA’s fee
schedule for the 2022 FY, the user fee for each NDA application requiring clinical data is USD 3,117,218 and the annual program fee is USD 369,413. Fee waivers or reductions are available in certain circumstances, including a waiver of the
application fee for the first application filed by a small business. Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.
Once the NDA submission has been submitted, the FDA has 60 days after submission of the NDA to conduct an initial review to determine whether it is sufficient to accept for filing. Under the PDUFA, the FDA sets a goal
date by which it plans to complete its review. This is typically 12 months from the date of submission of the NDA application. The review process is often extended by FDA requests for additional information or clarification. Before approving an
NDA, the FDA will inspect the facilities at which the product is manufactured and will not approve the product unless the manufacturing facility complies with cGMP regulations and may also inspect clinical study sites for integrity of the data
supporting safety and efficacy. The FDA may also convene an advisory committee of external experts to provide input on certain review issues relating to risk, benefit and interpretation of clinical study data. The FDA is not bound by the
recommendations of an advisory committee, but generally follows such recommendations in making its decisions. The FDA may delay approval of an NDA if applicable regulatory criteria are not satisfied and/or the FDA requires additional testing or
information. The FDA may require post-marketing testing and surveillance to monitor safety or efficacy of a product.
After the FDA evaluates the NDA and conducts inspections of the manufacturing facilities where the drug product and/or its API will be produced, it may issue an Approval Letter or a Complete Response Letter. An
Approval Letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready
for approval. A Complete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical study or studies, and/or other significant, expensive and time-consuming requirements related to clinical studies,
preclinical studies or manufacturing. Even if such additional information is submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. The FDA could also approve the NDA with a Risk Evaluation and Mitigation
Strategy (REMS), plan to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA
also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct one or more post-marketing studies or clinical studies. Such post-marketing testing
may include Phase 4 clinical studies and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.
Special protocol assessment
The FDA and an IND sponsor may agree in writing on the design and size of clinical studies intended to form the primary basis of a claim of effectiveness in an NDA. This process is known as a special protocol
assessment (SPA). Upon a specific request for a SPA by an IND sponsor, the FDA will evaluate the protocol. If an SPA agreement is reached, however, it is not a guarantee of product approval by the FDA or approval of any permissible claims about the
product. The FDA retains significant latitude and discretion in interpreting the terms of the SPA agreement and the data and results from any study that is the subject of the SPA agreement. In particular, the SPA agreement is not binding on the FDA
if previously unrecognized public health concerns later come to light, other new scientific concerns regarding product safety or efficacy arise, the IND sponsor fails to comply with the agreed-upon protocol, or the relevant data, assumptions, or
information provided by the IND sponsor when requesting a SPA agreement change, are found to be false statements or misstatements, or are found to omit relevant facts. An SPA agreement may not be changed by the sponsor or the FDA after the study
begins except with the written agreement of the sponsor and the FDA, or if the FDA determines that a substantial scientific issue essential to determining the safety or effectiveness of the drug was identified after the testing began.
Orphan-drug designation
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which is a disease or condition that either affects fewer than 200,000
individuals in the US, or affects more than 200,000 individuals in the US but there is no reasonable expectation that the cost of developing and making a drug product available in the US for this type of disease or condition will be recovered from
sales of the product in the US. Orphan-product designation must be requested before submitting an NDA. After the FDA grants orphan-product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the
FDA. Orphan-product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.
If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan-product exclusivity, which means
that the FDA cannot approve any other applications to market the same drug or biological product for the same indication for 7 years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.
The designation of such drug also entitles a party to financial incentives such as opportunities for grant funding toward clinical study costs, tax advantages and user-fee waivers. Competitors, however, may receive approval of different products
for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan-product exclusivity also could block the approval of one of
our products for 7 years if a competitor obtains approval of the same drug or biological product as defined by the FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or disease. If
a drug product designated as an orphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan-product exclusivity. Orphan-drug status in the EU has similar but not identical benefits
in that jurisdiction.
Disclosure of clinical trial information
Sponsors of clinical trials (other than Phase 1 trials) of FDA-regulated products, including drugs, are required to register and disclose certain clinical trial information. Information related to the product, comparator, patient population, phase
of investigation, trial sites and investigators and other aspects of the clinical trial is made public as part of the registration. Sponsors are also obligated to disclose the results of their clinical trials after completion. Disclosure of the
results of certain trials may be delayed until the new product or new indication being studied has been approved. However, there are evolving rules and increasing requirements for publication of trial-related information, and it is possible that
data and other information from trials involving drugs that never garner approval could be required to be disclosed in the future. In addition, publication policies of major medical journals mandate certain registration and disclosures as a
pre-condition for potential publication, even when this is not presently mandated as a matter of law. Competitors may use this publicly available information to gain knowledge regarding the progress of development programs.
Post-approval requirements
Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, periodic reporting,
product distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review
and approval. There also are continuing, annual user-fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to
periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations
also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must
continue to expend time, money, and effort in the areas of production and QC to maintain cGMP compliance.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of
previously unknown problems with a product, including AEs of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety
information, imposition of post-marketing studies or clinical studies to assess new safety risks, or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:
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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
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fines, warning letters or holds on post-approval clinical studies;
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refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;
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product seizure or detention, or refusal to permit the import or export of products; or
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injunctions or the imposition of civil or criminal penalties.
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The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the
approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.
Patent term restoration and marketing exclusivity
Depending upon the timing, duration, and specifics of FDA approval of the use of our product candidates, some of our US patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of
1984, referred to as the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent term to be extended up to 5 years as compensation for patent term effectively lost due to the FDA’s pre-market approval requirements. However, patent term restoration
cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration period is generally one-half of the time between the effective date of an IND and the submission date of an NDA,
plus the time between the submission date of an NDA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved
drug is eligible for the extension. Extensions are not granted as a matter of right and the extension must be applied for prior to expiration of the patent and within a 60-day period from the date the product is first approved for commercial
marketing. The USPTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. Where a product contains multiple active ingredients, if any one active ingredient has not been previously
approved, it can form the basis of an extension of patent term provided the patent claims that ingredient or the combination containing it.
In the future, we may apply for patent term restoration for some of our presently owned patents to add patent life beyond their current expiration date, depending on the expected length of clinical studies and other
factors involved in the submission of the relevant NDA; however, there can be no assurance that any such extension will be granted to us.
The Biologics Price Competition and Innovation Act of 2009 provides up to 12 years of non-patent data exclusivity within the US to the first applicant to gain approval of a Biologics License Application for a new
biologic product that has not previously been approved by the FDA, which we refer to as a reference product. This 12-year data exclusivity does prohibit the FDA from approving a biosimilar or interchangeable product of such reference product until
12 years after the licensure of such reference product. In addition, the FDA will not accept a biosimilar or interchangeable product application for review until 4 years after the date of first licensure of such reference product. Under
21CFR314.108, 5 years’ exclusivity is also granted to new chemical entities that contain no active moiety that has been approved by the FDA under section 505(b). This market exclusivity bars the FDA from accepting for review any ANDA or 505(b)(2)
application for a drug containing the same active moiety for (i) 5 years if an ANDA or 505(b)(2) application does not contain a paragraph IV certification to a listed patent, or (ii) 4 years if an ANDA or 505(b)(2) is submitted containing a
paragraph IV certification to a listed patent. Moreover, pediatric exclusivity, if granted, may add 6 months of exclusivity if the reference product has been studied with respect to a pediatric indication in accordance with certain regulatory
requirements. A reference product may also be granted 7 years of orphan-drug exclusivity for the treatment of a rare disease or condition under section 527(a) of FDCA, which would run in parallel with the 12 years of data exclusivity of the
reference product, if applicable.
Non-US regulation
In order to market any product outside of the US, we would need to comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy, and governing,
among other things, clinical studies, marketing authorization, commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign
regulatory authorities before we can commence clinical studies or marketing of the product in foreign countries and jurisdictions. Although many of the issues discussed above with respect to the US apply similarly in the context of the EU, the
approval process varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods, as described in greater detail below. The time required to obtain approval in other countries and
jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in
one country or jurisdiction may negatively impact the regulatory process in others.
EU drug review approval
In the EEA, which is comprised of the 27 Member States of the EU plus Norway, Iceland and Liechtenstein medicinal products can only be commercialized after obtaining a marketing authorization. There are two types of
marketing authorization: the Community Marketing Authorization, which is issued by the EC through the Centralized Procedure based on the opinion of the Committee for Medicinal Products for Human Use (CHMP), a body of the EMA, and which is valid
throughout the entire territory of the EEA; and the National Marketing Authorization, which is issued by the competent authorities of the Member States of the EEA and authorizes marketing only in that Member State’s national territory and not the
EEA as a whole.
The Centralized Procedure is compulsory for human medicines for the treatment of human immunodeficiency virus or acquired immune deficiency syndrome (AIDS), cancer, diabetes, neurodegenerative diseases, autoimmune and
other immune dysfunctions, and viral diseases; for veterinary medicines for use as growth or yield enhancers; for medicines derived from biotechnology processes, such as genetic engineering; for advanced-therapy medicines, such as gene-therapy,
somatic cell-therapy or tissue-engineered medicines; and for officially designated ‘orphan medicines’ (medicines used for rare human diseases). The Centralized Procedure is optional for products containing a new active substance not yet authorized
in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation, or for products that are in the interest of public health in the EU. The National Marketing Authorization is for products not falling within
the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a Member State of the EEA, this National Marketing Authorization can be recognized in another Member State through the Mutual Recognition
Procedure. If the product has not received a National Marketing Authorization in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. Under the Decentralized
Procedure, an identical dossier is submitted to the competent authorities of each of the Member States in which the marketing authorization is sought, one of which is selected by the applicant as the Reference Member State (RMS). If the RMS
proposes to authorize the product, and the other Member States do not raise objections, the product is granted a National Marketing Authorization in all the Member States in which the authorization was sought. Before granting the marketing
authorization, the EMA or the competent authorities of the Member States of the EEA assesses the risk–benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
Regulation in the EU
Product development, the regulatory approval process, and safety monitoring of medicinal products and their manufacturers in the EU proceed in much the same manner as they do in the US. Therefore, many of the issues
discussed above apply similarly in the context of the EU. In addition, drugs are subject to the extensive price and reimbursement regulations of the various EU Member States.
Clinical studies
As is the case in the US, the various phases of preclinical and clinical research in the EU are subject to significant regulatory controls. The Clinical Trials Directive 2001/20/EC, as amended and which will be
replaced in 2021 or later by Regulation (EU) No 536/2014) provides a system for the approval of clinical studies in the European Union via implementation through national legislation of the Member States. Under this system, approval must be
obtained from the competent national authorities of the EU Member States in which the clinical trial is to be conducted. Furthermore, a clinical trial may only be started after a competent ethics committee has issued a favorable opinion on the
clinical trial application, which must be supported by an investigational medicinal product dossier with supporting information prescribed by the Clinical Trials Directive and corresponding national laws of the Member States, and further detailed
in applicable guidance documents. A clinical trial may only be undertaken if provision has been made for insurance or indemnity to cover the liability of the investigator or sponsor. In certain countries, the sponsor of a clinical trial has a
strict (faultless) liability for any (direct or indirect) damage suffered by trial subjects. The sponsor of a clinical trial, or its legal representative, must be based in the EEA. European regulators and ethics committees also require the
submission of AE reports during a study and a copy of the final study report.
Marketing approval
Marketing approvals under the EU regulatory system may be obtained through a centralized or decentralized procedure. The centralized procedure results in the grant of a single marketing authorization, which is valid
for all (currently 27) EU Member States and the three European Free Trade Association (EFTA) members (Norway, Iceland and Liechtenstein).
Pursuant to Regulation (EC) No. 726/2004, as amended, the centralized procedure is mandatory for drugs developed by means of specified biotechnological processes, advanced-therapy medicinal products, drugs for human
use containing a new active substance for which the therapeutic indication is the treatment of specified diseases, including but not limited to AIDS, neurodegenerative disorders, auto-immune diseases and other immune dysfunctions, as well as drugs
designated as orphan drugs. The CHMP also has the discretion to permit other products to use the centralized procedure if it considers them sufficiently innovative or they contain a new active substance.
In the marketing authorization application, the applicant must properly and sufficiently demonstrate the quality, safety and efficacy of the drug. Under the centralized approval procedure, the CHMP, possibly in
conjunction with other committees, is responsible for drawing up the opinion of the EMA on any matter concerning the admissibility of the files submitted in accordance with the centralized procedure, such as an opinion on the granting, variation,
suspension or revocation of a marketing authorization, and pharmacovigilance.
The CHMP and other committees are also responsible for providing guidelines and have published numerous guidelines that may apply to our product candidates. These guidelines provide additional guidance on the factors
that the EMA will consider in relation to the development and evaluation of drug products and may include, among other things, the preclinical studies required in specific cases, the manufacturing and control information that should be submitted in
a marketing authorization application, and the post-approval measures required to monitor patients and evaluate the long-term efficacy and potential adverse reactions. Although these guidelines are not legally binding, we believe that our
compliance with them is likely to be necessary to gain approval for any of our product candidates.
The maximum timeframe for the evaluation of a marketing authorization application by the CHMP under the centralized procedure is 210 days after receipt of a valid application. This period will be suspended until such
time as the supplementary information requested by the CHMP has been provided by the applicant. Likewise, this time limit will be suspended for the time allowed for the applicant to prepare oral or written explanations. When an application is
submitted for a marketing authorization in respect of a drug that is of major interest from the viewpoint of public health and in particular therapeutic innovation, the applicant may request an accelerated assessment procedure. If the CHMP accepts
such a request, the time limit of 210 days will be reduced to 150 days, but it is possible that the CHMP can revert to the standard time limit for the centralized procedure if it considers that it is no longer appropriate to conduct an accelerated
assessment.
If the CHMP concludes that the quality, safety and efficacy of the product are sufficiently proven, it adopts a positive opinion. This is sent to the EC, which drafts a decision within approximately 67 days following
the CHMP opinion. After consulting with the Member States, the EC adopts a decision and grants a marketing authorization, which is valid for the whole of the EEA. The marketing authorization may be subject to certain conditions, which may include,
without limitation, the performance of post-authorization safety and/or efficacy studies.
The EMA has various programs, including accelerated assessment, conditional approval and PRIority MEdicines (PRIME), which are intended to increase agency interactions, expedite or facilitate the process for reviewing
product candidates, and/or provide for initial approval on the basis of surrogate endpoints. One or more of our product candidates may qualify for some of these expedited development and review programs. However, even if a product candidate
qualifies for one or more of these programs, the EMA may later decide that the product candidate no longer meets the conditions for qualification. Eligibility to the PRIME scheme is limited to products considered to offer a major therapeutic
advantage in populations with high unmet need. PRIME is a voluntary scheme aimed at enhancing interaction and early dialogue with developers of promising medicines through achieving the early appointment of the Rapporteur for the product,
optimizing development plans and speeding up evaluation so these medicines can reach patients earlier. Products benefiting from PRIME can expect to be eligible for accelerated assessment at the time of application for a marketing authorization
application.
EU legislation also provides for a system of regulatory data and market exclusivity. According to Article 14(11) of Regulation (EC) No. 726/2004, as amended, and Article 10(1) of Directive 2001/83/EC, as amended, upon
receiving marketing authorization, new chemical entities approved on the basis of a complete independent data package benefit from 8 years of data exclusivity and an additional 2 years of market exclusivity. Data exclusivity prevents regulatory
authorities in the EU from referencing the innovator’s data to assess a generic (abbreviated) application. During the additional 2-year period of market exclusivity, a generic marketing authorization can be submitted, and the innovator’s data may
be referenced, but no generic medicinal product can be marketed until the expiration of the market exclusivity. The overall 10-year period will be extended to a maximum of 11 years if, during the first 8 years of those 10 years, the marketing
authorization holder (MAH) obtains an authorization for one or more new therapeutic indications that, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing
therapies. Even if a compound is considered to be a new chemical entity and the innovator can gain the period of data exclusivity, another company nevertheless could also market another version of the drug if such company obtained marketing
authorization based on a marketing authorization application with a completely independent data package of pharmaceutical test, preclinical tests and clinical studies. However, products designated as orphan medicinal products enjoy, upon receiving
marketing authorization, a period of 10 years of orphan market exclusivity. See also “—Orphan drug regulation” below. Depending upon the timing and duration of the EU marketing authorization process, products may be eligible for an SPC of up to 5
years’, pursuant to Regulation (EC) No. 469/2009. Such SPCs extend the rights under the basic patent for the drug.
In the EU, the pediatric regulation [Regulation (EC) No 1901/2006 as amended] requires sponsors to submit a pediatric investigation plan at the end of Phase 1. This plan will provide the details of the quality,
non-clinical and clinical studies required to support the authorization of a pediatric indication. Additional rules apply to medicinal products for pediatric use under Regulation (EC) No. 1901/2006. Potential incentives include a six-month
extension of any supplementary protection certificate granted pursuant to Regulation (EC) No. 469/2009, but not in cases in which the relevant product is designated as an orphan medicinal product pursuant to Regulation (EC) No. 141/2000, as
amended. Instead, a medicinal product designated as an orphan medicinal product may enjoy an extension of the 10-year market exclusivity period granted under Regulation (EC) No. 141/2000 to 12 years subject to the conditions applicable to orphan
drugs.
Orphan drug regulation
In the EU, Regulation (EC) No. 141/2000, as amended, states that a drug will be designated as an orphan drug if its sponsor can establish:
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that it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than 5 in 10,000 persons in the EU when the application is made, or that it is intended for the
diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition in the EU and that without incentives it is unlikely that the marketing of the drug in the EU would generate sufficient return
to justify the necessary investment; and
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that there exists no satisfactory method of diagnosis, prevention or treatment of the condition in question that has been authorized in the EU or, if such method exists, that the drug will be of significant benefit to those affected by
that condition.
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Regulation (EC) No. 847/2000 sets out further provisions for implementation of the criteria for designation of a drug as an orphan drug. An application for the designation of a drug as an orphan drug must be submitted
at any stage of development of the drug before filing of a marketing authorization application.
If a EU-wide community marketing authorization in respect of an orphan drug is granted or if all the EU Member States have granted marketing authorizations in accordance with the procedures for mutual recognition, the
EU and the Member States will not, for a period of 10 years, accept another application for a marketing authorization, or grant a marketing authorization or accept an application to extend an existing marketing authorization, for the same
therapeutic indication, in respect of a similar drug. This period may, however, be reduced to 6 years if, at the end of the fifth year, it is established, with respect to the drug concerned, that the criteria for orphan-drug designation are no
longer met; in other words, when it is shown on the basis of available evidence that the product is sufficiently profitable not to justify maintenance of market exclusivity. Notwithstanding the foregoing, a marketing authorization may be granted,
for the same therapeutic indication, to a similar drug if:
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the holder of the marketing authorization for the original orphan drug has given its consent to the second applicant;
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the holder of the marketing authorization for the original orphan drug is unable to supply sufficient quantities of the drug; or
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the second applicant can establish in the application that the second drug, although similar to the orphan drug already authorized, is safer, more effective or otherwise clinically superior.
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Other incentives available to orphan drugs in the EU include financial incentives such as a reduction of fees or fee waivers and protocol assistance. Orphan-drug designation does not shorten the duration of the
regulatory review and approval process.
Manufacturing and manufacturers’ license
Pursuant to Directive 2003/94/EC, as transposed into the national laws of the Member States, the manufacturing of investigational medicinal products and approved drugs is subject to a separate manufacturer’s license
and must be conducted in strict compliance with cGMP requirements, which mandate the methods, facilities and controls used in manufacturing, processing and packing of drugs to assure their safety and identity. Manufacturers must have at least one
qualified person permanently and continuously at their disposal. The qualified person is ultimately responsible for certifying that each batch of finished product released onto the market has been manufactured in accordance with cGMP and the
specifications set out in the marketing authorization or investigational medicinal product dossier. cGMP requirements are enforced through mandatory registration of facilities and inspections of those facilities. Failure to comply with these
requirements could interrupt supply and result in delays, unanticipated costs and lost revenues, and subject the applicant to potential legal or regulatory action, including but not limited to warning letters, suspension of manufacturing, seizure
of product, injunctive action, or possible civil and criminal penalties.
Wholesale distribution and license
Pursuant to Directive 2001/83/EC, the wholesale distribution of medicinal products is subject to the possession of an authorization to engage in activity as a wholesaler in medicinal products. Possession of a
manufacturing authorization includes authorization to distribute by wholesale the medicinal products covered by that authorization. The distribution of medicinal products must comply with the principles and guidelines of cGDP.
Advertising
In the EU, the promotion of prescription medicines is subject to intense regulation and control, including EU and national legislation as well as self-regulatory codes (industry codes). Advertising legislation inter alia includes a prohibition on direct-to-consumer advertising. All advertising of prescription medicines must be consistent with the product’s approved Summary of
Product Characteristics, and must be factual, accurate, balanced and not misleading. Advertising of prescription medicines pre-approval or off-label is not allowed. Some jurisdictions require that all promotional materials for prescription
medicines be subjected to prior review and approval, either internal or regulatory.
Other regulatory requirements
An MAH for a medicinal product is legally obliged to fulfill a number of obligations by virtue of its status as an MAH. The MAH can delegate the performance of related tasks to third parties, such as distributors or
marketing partners, provided that this delegation is appropriately documented and the MAH maintains legal responsibility and liability.
The obligations of an MAH include the following:
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Manufacturing and batch release—MAHs should guarantee that all manufacturing operations comply with relevant laws and regulations, applicable GMPs, and the product specifications and manufacturing
conditions set out in the marketing authorization, and that each batch of product is subject to appropriate release formalities.
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Availability and continuous supply—Pursuant to Directive 2001/83/EC, as transposed into the national laws of the Member States, the MAH for a medicinal product and the distributors of the said
medicinal product actually placed on the market in a Member State shall, within the limits of their responsibilities, ensure appropriate and continued supplies of that medical product to pharmacies and persons authorized to supply medicinal
products so that the needs of patients in the Member State in question are covered.
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Pharmacovigilance—MAHs are obliged to establish and maintain a pharmacovigilance system, including a qualified person responsible for oversight, to submit safety reports to the regulators and to
comply with the good pharmacovigilance practice guidelines adopted by the EMA.
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Advertising and promotion—MAHs remain responsible for all advertising and promotion of their products, including promotional activities by other companies or individuals on their behalf, and in
some cases must conduct internal or regulatory pre-approval of promotional materials. Regulation in this area also covers interactions with healthcare practitioners and/or patient groups, and in some jurisdictions legal or self-regulatory
obligations to disclose such interactions exist.
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Medical affairs/scientific service—MAHs are required to disseminate scientific and medical information on their medicinal products to healthcare professionals, regulators and patients.
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Legal representation and distributor issues—MAHs are responsible for regulatory actions or inactions of their distributors and agents.
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Preparation, filing and maintenance of the application and subsequent marketing authorization— MAHs must maintain appropriate records, comply with the marketing authorization’s terms and
conditions, fulfill reporting obligations to regulators, submit renewal applications and pay all appropriate fees to the authorities. We may hold any future marketing authorizations granted for our product candidates in our own name, or
appoint an affiliate or a collaboration partner to hold marketing authorizations on our behalf. Any failure by an MAH to comply with these obligations may result in regulatory action against an MAH and ultimately threaten our ability to
commercialize our products.
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Pricing and reimbursement
In the EU, the pricing and reimbursement mechanisms by private and public health insurers vary largely by country and even within countries. The public systems reimbursement for standard drugs is determined by
guidelines established by the legislator or responsible national authority. The approach taken varies by Member State. Some jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement
price has been agreed. Other Member States allow companies to fix their own prices for medicines, but monitor and control company profits and may limit or restrict reimbursement. The downward pressure on healthcare costs in general, particularly
prescription drugs, has become very intense. As a result, increasingly high barriers to the entry of new products are being erected and some EU countries require the completion of studies that compare the cost-effectiveness of a particular product
candidate with that of currently available therapies in order to obtain reimbursement or pricing approval. Special pricing and reimbursement rules may apply to orphan drugs. Inclusion of orphan drugs in reimbursement systems tend to focus on the
medical usefulness, need, quality and economic benefits to patients and the healthcare system as for any drug. Acceptance of any medicinal product for reimbursement may come with cost, use and often volume restrictions, which again can vary by
country. In addition, results based rules of reimbursement may apply.
Other US healthcare laws
In addition to FDA restrictions on marketing of pharmaceutical or biopharmaceutical products, federal and state healthcare laws restrict certain business practices in the pharmaceutical and biopharmaceutical
industries. These laws include, but are not limited to, anti-kickback, false claims, data privacy and security, and transparency statutes and regulations.
The US federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, to induce, or in return for, purchasing,
leasing, ordering or arranging for the purchase, lease or order of any good, facility, item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include
anything of value, including for example, gifts, discounts, the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payment, ownership interests and providing anything at less than its fair market value. The
Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical and biopharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory
exceptions and regulatory safe harbors protecting certain common activities from prosecution, the exceptions and safe harbors are drawn narrowly, and our practices may not in all cases meet all the criteria for a statutory exception or safe harbor
protection. Practices involving remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all the
requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will
be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to
induce referrals of federal healthcare-covered business, the statute has been violated. The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (collectively, the ACA), amended the intent
requirement under the Anti-Kickback Statute and criminal healthcare fraud statutes (discussed below) such that a person or entity no longer needs to have actual knowledge of the statute or the specific intent to violate it in order to have
committed a violation. In addition, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the
civil False Claims Act (discussed below). Further, the Civil Monetary Penalties Law imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health
program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.
The federal false claims laws prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval to the federal government or
knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim
includes “any request or demand” for money or property presented to the US government. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product
to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, and
thus non-covered, uses. The federal HIPAA created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and
knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of, or payment for, healthcare benefits, items or services.
Additionally, the ACA also included the federal Physician Payments Sunshine Act, which requires that certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under
Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or
individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.
Additionally, many states have similar healthcare statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.
Certain states require the posting of information relating to clinical studies, and require pharmaceutical companies to implement a comprehensive compliance program that includes a limit on expenditures for, or payments to, individual medical or
health professionals and to track and report gifts and other payments made to physicians and other healthcare providers. If our operations are found to be in violation of any of the health regulatory laws described above or any other laws that
apply to us, we may be subject to penalties, including potentially significant criminal, civil and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion of products from reimbursement under government
programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and
our results of operations. To the extent that any of our products will be sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including
safety surveillance, anti-fraud and abuse laws, implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals.
Data privacy and security laws
In addition, we may be subject to international, federal and state data privacy and security laws, regulations, rules and standards. Internationally, laws, regulations and standards in many jurisdictions, such as the
GDPR and the UK GDPR, apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information. At the federal level, HIPAA, as amended by the Health Information Technology for Economic and
Clinical Health Act (HITECH), and its implementing regulations, imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s privacy and
security standards directly applicable to business associates—independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH
also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions
in federal courts to enforce the federal HIPAA laws and to seek attorneys’ fees and costs associated with pursuing federal civil actions. In addition, state laws, (such as the CCPA and the CPRA,) govern the privacy and security of health and other
personal information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. Non-compliance with these laws, regulations, rules and standards could
result in significant penalties or legal liability. Although we take steps to comply with applicable laws, rules and regulations, we cannot ensure that we will not be subject to regulatory or private actions, investigations, disputes and
litigation, which may include substantial fines or other legal liability for noncompliance of data privacy and security laws, rules and regulations, including in the event of a cybersecurity breach or other security incident. We could be adversely
affected if legislation or regulations are expanded to require changes in our or our third-party service providers’ business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively
affect our business, results of operations or financial condition. See “Risk Factors— Changes in laws, rules or regulations relating to data privacy and
security, or any actual or perceived failure by us to comply with such laws, rules, regulations and standards, or contractual or other obligations relating to data privacy and security, could have a material adverse effect on our reputation,
results of operations, financial condition and cash flows.”
Pharmaceutical coverage, pricing and reimbursement
In both domestic and foreign markets, our or our collaboration partners’ sales of any approved products will depend in part on the availability of coverage and adequate reimbursement from third-party payors.
Third-party payors include government authorities, managed care providers, private health insurers and other organizations. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely
on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products, if approved, unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our
products. Sales of our products will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our products will be paid by third-party payors. These third-party payors are increasingly focused on containing
healthcare costs by challenging the price and examining the cost-effectiveness of medical products and services.
In addition, significant uncertainty exists as to the coverage and reimbursement status of newly approved healthcare product candidates. The market for our product candidates for which we may receive regulatory
approval will depend significantly on access to third-party payors’ drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement. The industry competition to be included in such formularies often leads
to downward pricing pressures on pharmaceutical or biopharmaceutical companies. Additionally, third-party payors may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less
costly generic equivalent or another alternative is available. Because each third-party payor individually approves coverage and reimbursement levels, obtaining coverage and adequate reimbursement is a time-consuming, costly and sometimes
unpredictable process. We may be required to provide scientific and clinical support for the use of any product to each third-party payor separately with no assurance that approval would be obtained, and we may need to conduct expensive
pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. This process could delay the market acceptance of any product and could have a negative effect on our future revenues and operating results. We cannot be
certain that our product candidates will be considered cost-effective. Because coverage and reimbursement determinations are made on a payor-by-payor basis, obtaining acceptable coverage and reimbursement from one payor does not guarantee we will
obtain similar acceptable coverage or reimbursement from another payor. If we are unable to obtain coverage of, and adequate reimbursement and payment levels for, our product candidates from third-party payors, physicians may limit how much or
under what circumstances they will prescribe or administer them and patients may decline to purchase them. This in turn could affect our ability to successfully commercialize our products and impact our profitability, results of operations,
financial condition and future success.
Furthermore, in many foreign countries, particularly the countries of the EU, the pricing of prescription drugs is subject to government control. In some non-US jurisdictions, the proposed pricing for a drug must be
approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the EU provides options for its member states to restrict the range of medicinal products for which their
national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect
controls on the profitability of the company placing the medicinal product on the market. We may face competition for our product candidates from lower-priced products in foreign countries that have placed price controls on pharmaceutical or
biopharmaceutical products. In addition, there may be importation of foreign products that compete with our own products, which could negatively impact our profitability.
Healthcare reform
In the US and other jurisdictions, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future results of operations as
we begin to commercialize our products directly.
In particular, there have been and continue to be a number of initiatives at the US federal and state level that seek to reduce healthcare costs. Initiatives to reduce the federal deficit and to reform healthcare
delivery are increasing cost-containment efforts. We anticipate that Congress, state legislatures and the private sector will continue to review and assess alternative benefits, controls on healthcare spending through limitations on the growth of
private health insurance premiums and Medicare and Medicaid spending, the creation of large insurance purchasing groups, price controls on pharmaceuticals and other fundamental changes to the healthcare delivery system. Any proposed or actual
changes could limit or eliminate our spending on development projects and affect our ultimate profitability.
In March 2010, the ACA, as amended by the HCERA (collectively, the Health Care Reform Law) was signed into law. The Health Care Reform Law has the potential to substantially change the way healthcare is financed by
both governmental and private insurers. The Health Care Reform Law among other things, established an annual, non-deductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents; revised the
methodology by which rebates owed by manufacturers for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated; increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program;
extended the Medicaid Drug Rebate program to utilization of certain injectable outpatient drugs, as well as prescriptions of individuals enrolled in Medicaid managed care organizations; required manufacturers to offer 50% point-of-sale discounts on
negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; and implemented payment system reforms including a
national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models. On July 24, 2020 and September 13,
2020, the Trump administration announced several executive orders related to prescription drug pricing that attempt to implement several of the administration’s proposals. As a result, the FDA released a final rule on September 24, 2020, effective
November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, the US Department of Health and Human Services, or HHS, finalized a regulation removing safe harbor
protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The rule also creates a new safe harbor for price
reductions reflected at the point-of-sale, as well as a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers. On November 20, 2020, CMS issued an interim final rule implementing former President Trump’s
Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries, effective January 1, 2021. On December 28, 2020, the US
District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule. It is unclear whether the Biden administration will work to reverse these measures or pursue similar policy
initiatives. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts,
restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
The future of the Health Care Reform Law remains uncertain. In January 2017, Congress voted to adopt a budget resolution for the fiscal year 2017 that authorized the implementation of legislation that would repeal
portions of the Health Care Reform Law. On December 14, 2018, a federal judge in Texas ruled that the Health Care Reform Law is unconstitutional in its entirety because the “individual mandate” was repealed by
Congress as part of the 2017 Tax Act. While the judge, as well as the Trump administration and CMS, have stated that the ruling will have no immediate effect pending appeal of the decision, it is unclear how this decision, subsequent appeals, and
other efforts to repeal and replace the ACA, will impact our business. On December 18, 2019, the Fifth Circuit Court of Appeals upheld the lower court’s decision that the Health Care Reform Law was unconstitutional. On March 2, 2020, the US
Supreme Court granted certiorari to review the case and oral arguments were held on November 10, 2020. Although the US Supreme Court has yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order
to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the Health Care Reform Law marketplace. The executive order also instructs certain governmental
agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create
unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. Pending review, the Health Care Reform Law remains in effect, but it is unclear what effect this litigation, other efforts to repeal and replace
the Health Care Reform Law and the healthcare reform measures of the Biden administration will have on the status of the ACA. Litigation and legislation over the Health Care Reform Law are likely to continue, with unpredictable and uncertain
results.
In the future, there may continue to be additional proposals relating to the reform of the US healthcare system, some of which could further limit the prices we are able to charge for our products candidates, or the
amounts of reimbursement available for our product candidates. If future legislation were to impose direct governmental price controls and access restrictions, it could have a significant adverse impact on our business. Managed care organizations,
as well as Medicaid and other government agencies, continue to seek price discounts. Some states have implemented, and other states are considering, price controls or patient access constraints under the Medicaid program, and some states are
considering price-control regimes that would apply to broader segments of their populations that are not Medicaid-eligible. Due to the volatility in the current economic and market dynamics, we are unable to predict the impact of any unforeseen or
unknown legislative, regulatory, payor or policy actions, which may include cost-containment and healthcare-reform measures. Such policy actions could have a material adverse impact on our profitability.
Moreover, the recently enacted federal Drug Supply Chain Security Act imposes new obligations on manufacturers of pharmaceutical or biopharmaceutical products, among others, related to product tracking and tracing.
Among the requirements of this new federal legislation, manufacturers will be required to provide certain information regarding the drug product to individuals and entities to which product ownership is transferred, label drug product with a
product identifier, and keep certain records regarding the drug product. Further, under this new legislation, manufacturers will have drug product investigation, quarantine, disposition and notification responsibilities related to counterfeit,
diverted, stolen and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or that are otherwise unfit for distribution such that they would be reasonably likely to result in serious health
consequences or death.
Physician Payment Sunshine Act and transparency
The Physician Payment Sunshine Act requires most pharmaceutical and biopharmaceutical manufacturers to report annually to the Secretary of Health and Human Services any and all financial arrangements, payments, or
other transfers of value made by that entity to physicians and teaching hospitals. The payment information is made publicly available in a searchable format on a content management system website. Over the next several years, we will need to
dedicate significant resources to establish and maintain systems and processes in order to comply with these regulations. Failure to comply with the reporting requirements can result in significant civil monetary penalties. Similar laws have been
enacted or are under consideration in foreign jurisdictions, including France, which has adopted the Loi Bertrand, or French Sunshine Act, which became effective in 2013. In addition, the Code of Ethics from the EFPIA requires certain disclosures
of interactions with institutions and healthcare professionals in various jurisdictions in which we operate.
Environmental, health and safety laws and regulations
We are subject to numerous environmental, health and safety laws and regulations and permitting requirements, including those governing laboratory procedures, decontamination activities, and the handling,
transportation, use, remediation, storage, treatment, and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, and the risk of injury, contamination or noncompliance with environmental,
health and safety requirements cannot be eliminated. Although compliance with such laws and regulations and permitting requirements has not had a material effect on our capital expenditures, earnings or competitive position, environmental, health
and safety laws, and regulations and permitting requirements have tended to become increasingly stringent and, to the extent that legal or regulatory changes may occur in the future, they could result in, among other things, increased costs to us
or the impairment of our research, development or production efforts.
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Organizational structure
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We are a Swiss stock corporation (société anonyme) organized under the laws of Switzerland. We were formed as a Swiss limited liability company (société à responsabilité limitée) on February 13, 2003 with our registered office and domicile in Basel, Switzerland. We converted to a Swiss stock corporation (société anonyme) under the
laws of Switzerland on August 25, 2003. Our Swiss enterprise identification number is CHE-109.878.825. Prior to our initial public offering, we were a privately owned company. Our domicile and registered office is in Ecublens, near Lausanne, Canton
of Vaud, Switzerland. Our registered and principal executive offices are located at EPFL Innovation Park, Building B, 1015 Lausanne, Switzerland, our general telephone number is (41) 21 345 91 21 and our internet address is www.acimmune.com.
The Company controls a fully-owned subsidiary, AC Immune USA, Inc. (“AC Immune USA” or “Subsidiary”), which was registered and organized under the laws of Delaware, USA in Q2 2021. The Company and
its Subsidiary form the Group.
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Property, plant and equipment
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The Company’s capital expenditures were CHF 2.6 million in 2021 with CHF 2.1 million for laboratory equipment, additional laboratory space and leasehold improvements. These investments were made to enhance our research
facilities.
Facilities
We do not own any real property. The table below details the sizes and uses of our leased facilities as of December 31, 2021:
Location
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Primary Function
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Approximate Size
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École Polytechnique Fédérale Lausanne (EPFL)
Innovation Park Building B,
1015 Lausanne, Vaud, Switzerland
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Headquarters
Research, discovery, preclinical and clinical development
Chemistry manufacturing and control
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27,000 square feet
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1230 Avenue of the Americas
Suite 1634
New York, New York 10020
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US operations
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1,600 square feet
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The Innovation Park of the EPFL serves as our corporate headquarters, our research facility and laboratories. We believe that using the EPFL facilities instead of building our own infrastructure helps us to maximize
the value of our research and development capital and make efficient use of our funds as we continue to build and develop our pipeline. We believe that the space of our existing facilities is sufficient to meet our current needs.
ITEM 4A.
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UNRESOLVED STAFF COMMENTS
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None.
ITEM 5.
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OPERATING AND FINANCIAL REVIEW AND PROSPECTS
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You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements, including the notes thereto, included in this
Annual Report. The following discussion is based on our financial information prepared in accordance with IFRS as issued by the IASB, which might differ in material respects from generally accepted accounting principles in other jurisdictions. The
following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including
but not limited to those described under “Item 3. Key information—D. Risk factors” and elsewhere in this Annual Report.
Overview
To date, we have primarily financed our operations through the proceeds from our public offerings, share issuances, contract revenues from license and collaboration agreements and grants. We have no products approved
for commercialization and have never generated any revenues from product sales. Pharmaceutical and biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. It may be several years, if
ever, before we or our collaboration partners complete pivotal clinical studies and have a product candidate approved for commercialization, and we begin to generate revenue and royalties from product sales. Since our inception, we have received
upfront and milestone payments from our collaboration partners and certain other revenue. However, we have also incurred significant operating losses. We incurred net losses of CHF 73.0 million for the fiscal year ended December 31, 2021 and have
an accumulated losses balance of CHF 200.9 million as of December 31, 2021.
Strategic collaborations and licensing agreements
Since our inception, we have entered into strategic collaboration agreements with a range of partners covering a number of our product candidates. We entered into a strategic collaboration with Genentech in November
2006 (as amended in March 2009, January 2013, May 2014 and May 2015) regarding the development, manufacture and commercialization of crenezumab, and we refer to this agreement as the 2006 Agreement.
In June 2012, we entered into an additional strategic collaboration agreement with Genentech regarding the development, manufacture and commercialization of anti-Tau antibodies, which covers semorinemab, and we refer
to this agreement as the 2012 Agreement. We expect to capitalize on Genentech’s drug development and regulatory expertise and commercial capabilities to bring our partnered therapeutic products to market.
In May 2014, we entered into a license and collaboration agreement with LMI (formerly Piramal Imaging SA) covering our Tau-PET Imaging tracer.
In December 2014 (as amended in April 2016, July 2017, January 2019 and November 2019), we entered into a strategic collaboration agreement with Janssen regarding the development, manufacture and commercialization of
anti-Tau vaccines, which covers ACI-35. We expect to capitalize on Janssen and Johnson & Johnson’s extensive regulatory expertise and experience in developing, manufacturing and, if approved, commercializing vaccines to bring ACI-35 to market.
We entered into a license agreement with Lilly in December 2018 (as amended in September 2019 and March 2020) to research and develop Morphomer Tau small molecules for the treatment of AD and other neurodegenerative
diseases. Under the terms of this agreement, we have completed a Phase 1 clinical study with ACI-3024. Lilly is responsible for leading and funding further clinical development for small molecule Tau aggregation
inhibitors with plans to evaluate candidates in AD and NeuroOrphan indications. Lilly will also retain global commercialization rights for all indications.
Genentech, a member of the Roche Group
We have two partnership agreements with Genentech, a company with a reputation for scientific excellence and a history of bringing innovative protein therapeutics to market.
Anti-Abeta antibody in AD – 2006 agreement
In November 2006, we signed an exclusive, worldwide licensing agreement for crenezumab, our humanized monoclonal therapeutic antibody targeting misfolded Abeta. The agreement was amended March 2009, January 2013, May
2014 and May 2015. The agreement also provides for the development of a second therapeutic product for a non-AD indication based on the same intellectual property and anti-Abeta antibody compound. The value of this partnership is potentially
greater than USD 340 (CHF 314) million. The structure of the collaboration agreement is as follows:
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A right-of-use license;
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Clinical milestone payments: payable upon commencement of each of Phase 1 and Phase 2 of clinical developments, and upon the earlier of Genentech’s decision to authorize Phase 3 or the
commencement of Phase 3 of clinical developments. In addition, for a second indication, clinical milestone payments would be payable upon commencement of Phase 2 of clinical developments and upon the earlier of Genentech’s decision to
authorize Phase 3 or the commencement of Phase 3 of clinical developments;
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Regulatory milestone payments: payable upon making regulatory filings in the US and Europe, respectively, and milestone payments upon obtaining marketing approval in each of the US and Europe. In
addition, for a second indication, additional regulatory and approval milestones would be payable.
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Royalties: payable on sales, with different royalty rates applicable in the US and Europe. Royalty levels are tied to annual sales volumes. We may receive
royalties on sales of crenezumab with the percentage rates ranging from the mid-single digits to mid-teens.
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To date, we have received total milestone payments of USD 65 (CHF 70.1) million comprised of an upfront payment of USD 25 (CHF 31.6) million and of USD 40 (CHF 38.2) million for clinical development milestones
achieved, all prior to January 1, 2017.
Under the terms of the agreement, Genentech bears all the costs of developing crenezumab through the clinical phases. In addition, Genentech is responsible for the costs associated with seeking and obtaining regulatory
and marketing approvals, along with manufacturing sales and marketing costs. Intellectual property costs related to any crenezumab-related intellectual property filed solely by us and any costs associated with filing, maintaining and protecting
intellectual property filed jointly we share with Genentech. The agreement will terminate by its terms on the date on which all obligations between the parties with respect to the payment of milestones or royalties for licensed products have passed
or expired. Either party may terminate the agreement for any material breach by the other Party, provided a cure period of 90 days from the date when that notice is given.
On January 30, 2019, we announced that Roche, the parent of Genentech, is discontinuing the CREAD and CREAD 2 (BN29552 and BN29553) Phase 3 studies of crenezumab in people with prodromal-to-mild sporadic AD.
Crenezumab continues to be studied in the Phase 2 preventive trial, which began in 2013 in Colombia, of cognitively healthy individuals who carry the PSEN1 E280A autosomal-dominant mutation and are in a preclinical
phase of ADAD. This study will determine if treating people carrying this mutation with crenezumab prior to the onset of AD symptoms will slow or prevent the decline of cognitive and functional abilities. The data for the primary outcome measures
are expected in H1 2022.
Anti-Tau antibody in AD – 2012 agreement
In June 2012, we entered into a second agreement with Genentech to research, develop and commercialize our anti-Tau antibodies for use as immunotherapeutics and diagnostics. The agreement was amended in December 2015.
The value of this exclusive, worldwide alliance is potentially greater than CHF 400 million and includes upfront and clinical, regulatory and commercial milestone payments. In addition to milestones, we will be eligible to receive royalties on
sales at a percentage rate ranging from the mid-single digits to low-double digits. The agreement also provides for collaboration on at least one additional therapeutic indication outside of AD built on the same anti-Tau antibody program as well an
anti-Tau diagnostic product for AD.
To date, we have received payments totaling CHF 59 million, including a milestone payment of CHF 14 million received and recognized in Q4 2017 associated with the first patient dosing in a Phase 2 clinical trial for AD
with an anti-Tau monoclonal body known as semorinemab, a milestone payment of CHF 14 million recognized in Q2 2016 and received in July 2016, associated with the announcement of the commencement of the Phase 1 clinical study of semorinemab, and a
milestone payment of CHF 14 million received in 2015 in connection with the ED-GO decision.
The structure of the collaboration agreement is as follows.
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A right-of-use license.
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Preclinical and clinical milestone payments: payable upon selection of a lead candidate and commencement of each of Phase 1, 2 and 3 of clinical development. In addition, for a second indication,
clinical milestone payments would be payable upon commencement of each of Phase 2 and 3 of clinical development.
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Regulatory milestone payments: payable upon making regulatory filings for marketing approvals in each of the US, Europe and Japan. In addition, for a second indication, similar regulatory
milestones would be payable.
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Commercialization milestones: payable upon making a first commercial sale in each of the US, Europe and Japan. For a second indication, commercialization milestones exist for each of the US,
Europe and Japan, which are triggered by the first commercial sale for the second indication in each of those jurisdictions.
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Royalties: payable on sales with royalty rates differing based on the source of the intellectual property underlying the commercial product. We may receive royalties on sales at a percentage rate
ranging from the mid-single digits to low-double digits
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Under the terms of the agreement, Genentech bears all the costs of developing semorinemab through the clinical phases. In addition, Genentech is responsible for the costs associated with seeking and obtaining
regulatory and marketing approvals, along with manufacturing, sales and marketing costs. Intellectual property costs related to any anti-Tau antibody-related intellectual property filed solely by us and any costs associated with filing, maintaining
and protecting intellectual property filed jointly we share with Genentech. The agreement will terminate by its terms on the date on which all obligations between the parties with respect to the payment of milestones or royalties for licensed
products have passed or expired. Either party may terminate the agreement for any material breach by the other Party, provided a cure period of 90 days from the date when that notice is given.
On September 23, 2020, the Company reported that Genentech informed us of top line results from a Phase 2 trial of the anti-Tau antibody, semorinemab, in early (prodromal to mild) Alzheimer’s
disease (AD) which show that semorinemab did not meet its primary efficacy endpoint of reducing decline on Clinical Dementia Rating-Sum of Boxes (CDR-SB) compared to placebo. The primary safety endpoint was however met. Two secondary endpoints,
Alzheimer’s Disease Assessment Scale-Cognitive Subscale 13 (ADAS-Cog13) and Alzheimer’s Disease Cooperative Study Group – Activities of Daily Living Inventory (ADCS-ADL), were not met.
On August 31, 2021 the Company reported that Genentech had informed the Company that the Lauriet study had met one of its co-primary endpoints, ADAS-Cog 11. The second co-primary endpoint, ADCS-ADL, was not met. Safety
data showed that semorinemab was well tolerated with an acceptable safety profile and no unanticipated safety signals. On November 10, 2021, the Company reported that Genentech had presented the full top-line data from the Lauriet study during a
late-breaking session at the 14th Clinical Trials on Alzheimer’s Disease conference.
Janssen Pharmaceuticals, Inc.
Tau Vaccine in AD – 2014 agreement
In December 2014, we entered into an agreement with Janssen Pharmaceuticals, Inc. (Janssen) one of The Janssen Pharmaceutical Companies of Johnson & Johnson, to develop and commercialize therapeutic anti-Tau
vaccines for the treatment of AD and potentially other Tauopathies. The value of this collaboration is potentially up to CHF 500 million and includes upfront and clinical, regulatory and commercial milestones. In addition to milestones, we will be
eligible to receive royalties on sales at a percentage rate ranging from the high-single digits to the mid-teens for the phospho-tau vaccine program. In April 2016, July 2017, January 2019 and November 2019, the companies entered into the first,
second, third and fourth amendments, respectively. These amendments allow for the alignment of certain payment and activity provisions with the Development Plan and Research Plan activities. We and Janssen are co-developing the second-generation
lead therapeutic vaccines, ACI-35.030 and JACI-35.054, through Phase 1b/2a completion. AC Immune and Janssen will jointly share research and development costs until the completion of the first Phase 2b (AC Immune’s contribution to the first Phase
2b trial is capped). From Phase 2b and onwards, Janssen will assume responsibility for the clinical development, manufacturing and commercialization of the second-generation vaccines.
The Company received an upfront, non-refundable license fee of CHF 25.9 million, which we recognized as revenue in 2014. In May 2016, we received a payment of CHF 4.9 million for reaching a
clinical milestone in the Phase 1b study. As we met all performance obligations on reaching the milestone, we recognized this milestone as revenue.
The structure of the collaboration agreement is as follows:
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A right-of-use license.
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Clinical milestone payments: payable upon reaching certain milestones in the Phase 1b study, commencement of the first Phase 2b or 2b/3 of clinical development, upon reaching enrollment thresholds
in the first Phase 2b or Phase 2b part of the first Phase 2b/3, commencement of the first Phase 3 or Phase 3 part of a Phase 2b/3 study. In addition, for a second indication, clinical milestone payments would be payable upon commencement of
a Phase 3 clinical study, which would be payable concurrently with the first regulatory milestone, if Janssen were to file for regulatory approval based on Phase 2 clinical data.
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Regulatory milestone payments: payable upon making regulatory filings in the US, Europe, and Japan, respectively. In addition, for a second indication, similar regulatory milestones would be
payable. For a second indication, additional regulatory milestone payments are payable by Janssen to us upon receipt of each of the regulatory approvals in the US, Europe and Japan.
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Commercialization milestones: payable upon making a first commercial sale in each of the US, Europe and Japan, and upon achieving certain commercial milestones.
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Royalties: payable on sales, with royalty rates differing based on the level of annual sales. We may receive royalties on sales at a percentage rate ranging from the high-single digits to the
mid-teens for the phospho-tau vaccine program.
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Under the terms of the agreement, Janssen may terminate the agreement at any time after completion of the first Phase 1b clinical study in 2016 by providing 90 days’ notice to us. If not
otherwise terminated, the agreement shall continue until the expiration of all royalty obligations as outlined in the contract.
LMI (formerly Piramal Imaging SA)
Tau-PET imaging agent – 2014 agreement
In May 2014, we entered into an agreement, our first diagnostic partnership, with LMI, the former Piramal Imaging SA. The partnership with LMI is an exclusive, worldwide licensing agreement for the research,
development and commercialization of the Company’s Tau protein PET tracers supporting the early diagnosis and clinical management of AD and other Tau-related disorders and includes upfront and sales milestone payments totaling up to EUR 160 (CHF
167) million, plus royalties on sales at a percentage rate ranging from mid-single digits to low-teens. LMI may terminate the LCA at any time by providing 3 months’ notice to us.
The structure of the collaboration agreement is as follows:
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A right-of-use license.
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Clinical milestone payments: payable upon the commencement of the Phase 1, 2 and 3 studies for generation of data intended to support a regulatory submission in the US or the EU. We would be
entitled to further clinical milestone payments for the commencement of a Phase 2 and 3 study for a second indication.
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Regulatory milestone payments: payable upon acceptance of Regulatory filing (NDA) and Regulatory approval for Commercialization in the US or the EU.
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Commercialization milestones: tied to specific annual net sales amounts.
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Royalties: payable on sales, with royalty rates differing based on the level of annual sales. We may receive royalties on sales at a percentage rate ranging from the mid-single digits to the
low-teens.
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Eli Lilly and Company
Morphomer Tau small molecule – 2018 license agreement
In December 2018, we entered into an exclusive, worldwide licensing agreement with Eli Lilly and Company (Lilly) to research and develop Morphomer Tau small molecules for the
treatment of AD and other neurodegenerative diseases. Per the terms of the agreement, the Company received an initial upfront payment of CHF 80 million in Q1 2019 for the rights granted by the Company to
Lilly. To date, the Company has completed a Phase 1 clinical study with ACI-3024. The program will be expanded to NeuroOrphan indications and ACI-3024 will be further evaluated for efficacy in models of rare Tauopathies.
Additionally, the Company and Lilly have continued candidate characterization across the research program, identifying new and highly differentiated candidates with desired cerebrospinal fluid
exposure and selectivity for pathological aggregated Tau. These will be broadly developed in Tau-dependent neurodegenerative diseases by Lilly. Lilly is responsible for leading and funding further clinical development and will retain global
commercialization rights for all indications.
Per the terms of the agreement, the Company may become eligible to receive additional milestone payments totaling up to approximately CHF 1.9 billion. In addition to milestones, we
will be eligible to receive royalties on sales at a percentage rate ranging from the low double-digits to the mid-teens. The agreement became effective on January 23, 2019 (the “effective date”) when the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired. In Q3 2019, the Company and Lilly entered into the first amendment to divide the first discretionary milestone payment under the
agreement of CHF 60 million into two installments with the first CHF 30 million paid in Q3 2019 and the second CHF 30 million to be paid on or before March 31, 2020 unless Lilly terminated the agreement earlier. In Q1 2020, the Company and Lilly
entered into a second amendment to replace the second CHF 30 million to be paid on or before March 31, 2020 with two milestone payments, one of CHF 10 million to be paid on or before March 31, 2020 and the other of CHF 60 million following the
first patient dosed in a Phase 2 clinical study of a licensed product in the US or the EU.
The Company received an initial upfront payment of CHF 80 million in February 2019. We used the residual approach to estimate the selling price for the right-of-use license and an expected cost
plus margin approach for estimating the research and development activities. The right-of-use license was delivered on the effective date. The research and development activities were delivered over time as the services were performed. For these
services, revenue was recognized over time using the input method, based on costs incurred to perform the services, as the level of costs incurred over time is thought to best reflect the transfer of services to Lilly.
The structure of the collaboration agreement is as follows.
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An exclusive license: granted by us to Lilly under certain of our intellectual property to develop,
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manufacture and commercialize products containing Morphomer Tau small molecules for the treatment of AD and other neurodegenerative diseases throughout the world in any indication.
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Clinical milestone payments: payable upon completion of the Lilly preclinical activities period and following the first patient dosed in a Phase 2 and Phase 3 clinical study of a licensed product
in the US or the EU.
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Regulatory milestone payments: payable within 60 days after obtaining regulatory approval for any licensed product in the first indication and any licensed product in certain additional
indications in the US, Europe and Japan, respectively.
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Commercialization milestones: payable upon achieving certain commercial sales milestones.
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Royalties: payable on sales with royalty rates differing based on the level of annual sales of licensed products. We may receive royalties on sales at a percentage rate ranging from the low double-digits to the mid-teens.
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The agreement will terminate by the date of expiration of the last royalty term for the last licensed product. However, under the terms of the agreement, Lilly may terminate the agreement at any time after March 31,
2020 by providing 3 months’ notice to us.
We and Lilly also entered into a convertible note agreement that became effective on January 23, 2019 for USD 50 (CHF 50.3) million from Lilly. In Q2 2019, the Convertible Note Agreement with Lilly
automatically converted in line with the terms of the agreement. As a result of this conversion, 3,615,328 of our common shares were issued to Lilly. This note is now fully settled and there is no further equity or cash consideration due to Lilly
thereunder.
Grants
Michael J. Fox Foundation for Parkinson’s Research
In May 2020, the Company, as part of a joint arrangement with Skåne University Hospital (Skåne) in Sweden, was awarded a USD 3.2 (CHF 3.0) million grant from the MJFF’s Ken Griffin Alpha-synuclein Imaging
Competition. As part of this grant, AC Immune is eligible to receive USD 2.5 (CHF 2.3) million directly from the MJFF. Skåne will receive USD 0.7 (CHF 0.7) million of the total grant directly from the MJFF over two years to conduct and support
the clinical arm of the project.
In December 2021, the Company announced that it had been awarded two grants totaling USD 1.5 (CHF 1.4) million to advance small molecule PD programs. One award will support an existing early-stage program to develop
small molecules that can prevent intracellular aggregation and spreading of a-syn. The other award will fund research on the therapeutic potential of chemically and mechanistically novel, brain penetrant small molecule inhibitors of NLRP3
inflammasome activation for the treatment of PD.
Grant from the Target ALS Foundation
In Q1 2021, AC Immune was awarded a USD 0.3 (CHF 0.2) million grant from the Target ALS Foundation (Target ALS). This grant funds a collaboration between the Company and the Investigators at the Healey Center for ALS
at Massachusetts General Hospital (MGH) to accelerate the development of the Company’s proprietary immunoassays to detect disease-associated forms of TDP-43 in CSF and blood samples.
Critical accounting policies and significant judgments and estimates
Revenue recognition
In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which amends the guidance for accounting for revenues from contracts with
customers. This IFRS replaces all current revenue standards in IFRS including IAS 11 Construction Contracts, IAS 18 Revenue and various interpretations.
This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial
instruments. Under IFRS 15, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To
determine revenue recognition for arrangements that an entity determines are within the scope of IFRS 15, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the
contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the
five-step model to contracts only when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be
within the scope of IFRS 15, the Company assesses the goods or services promised within each contract, and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then
recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Contract revenue. The Company enters into LCAs, which are within the scope of IFRS 15, under which it licenses
certain proprietary rights to its product candidates and intellectual property to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees,
development, regulatory and/or commercial milestone payments, payments for research and clinical services the Company provides through either its full-time employees or third-party vendors, and royalties on net sales of licensed commercialized
products depending on the Company’s intellectual property. Each of these payments results in license, collaboration and other revenues, which are classified as contract revenue on the consolidated statements of income/(loss).
Licenses of intellectual property. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations
identified in the arrangement, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses
that are sold in conjunction with a related service, the Company uses judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. If the
performance obligation is settled over time, the Company determines the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting
period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone payments. At the inception of each arrangement that includes development, regulatory and/or commercial milestone payments, the Company evaluates
whether the milestones are considered highly probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is highly probable that a significant revenue reversal would not
occur in future periods, the associated milestone value is included in the transaction price. These amounts for the performance obligations under the contract are recognized as they are satisfied. At the end of each subsequent reporting period, the
Company re-evaluates the probability of achievement of such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments recorded would affect contract revenues and earnings in
the period of adjustment.
Research and development services. The Company has certain arrangements with our collaboration partners that include contracting our employees for research
and development programs. The Company assesses if these services are considered distinct in the context of each contract and, if so, they are accounted for as separate performance obligations. These revenues are recorded in contract revenue as the
services are performed.
Sublicense revenues. The Company has certain arrangements with our collaboration partners that include provisions
for sublicensing. The Company recognizes any sublicense revenues at the point in time it is highly probable to obtain and not subject to reversal in the future.
Contract balances: The Company receives payments and determines credit terms from its customers for its various performance obligations based on billing
schedules established in each contract. The timing of revenue recognition, billings and cash collections results in billed other current receivables, accrued income (contract assets), and deferred income (contract liabilities) on the consolidated
balance sheets. Amounts are recorded as other current receivables when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract
inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be 1 year or less.
Accrued research and development costs
We record accrued expenses for estimated costs of our research and development activities conducted by third-party service providers, which include among others the conduct of preclinical studies and clinical studies
and contract manufacturing activities. We record accrued expenses for estimated costs of our research and development activities based upon the estimated amount of services provided but not yet invoiced, and we include these costs in accrued
expenses on the consolidated balance sheets and within research and development expenses in the consolidated statements of income/(loss). These costs are a significant component of our research and development expenses.
We record accrued expenses for these costs based on the estimated amount of work completed in accordance with agreements established with these third parties, which involves the following process:
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communicating with our applicable personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or
otherwise notified of actual costs;
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estimating and accruing expenses in our consolidated financial statements as of each balance sheet date based on facts and circumstances known to us at the time; and
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periodically confirming the accuracy of our estimates with selected providers and adjusting, if necessary.
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Examples of estimated research and development expenses that we accrue include:
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fees paid to CROs in connection with preclinical and toxicology studies and clinical studies;
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fees paid to investigative sites in connection with clinical studies;
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fees paid to CMOs in connection with the production of our product candidates prior to qualifying for capitalization as inventory; and
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professional service fees for consulting and related services.
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We base our expense accruals related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and clinical CROs
that conduct and manage clinical studies on our behalf. The financial terms of these agreements vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful
enrollment of patients and the completion of clinical study milestones. Our service providers invoice us monthly in arrears for services performed. In accruing service fees, we estimate the time period over which the services will be performed and
the level of effort to be expended in each period. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from
our estimates.
To date, we have not experienced significant changes in our estimates of accrued research and development expenses after a reporting period. However, due to the nature of estimates, we may be
required to make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical studies and other research activities.
Share-based compensation
Options
The Company operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of equity-based awards is recognized as an expense. The total amount to
be expensed over the vesting period is determined by reference to the fair value of the instruments granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of
instruments that are expected to become exercisable. At each balance sheet date, the Company revises its estimates of the number of instruments that are expected to become exercisable. It recognizes the impact of the revision of original estimates,
if any, prospectively in the consolidated statements of income/(loss), and a corresponding adjustment to equity over the remaining vesting period.
We estimate the fair value of all time-vested options as of the date of grant using the Black-Scholes option-pricing model. Key assumptions in determining the fair value of
share options granted utilizing the Black-Scholes valuation method include the following:
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Assumption
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Method of estimation
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Estimated expected term of options
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Simplified method
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Expected volatility
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Estimate based on average historical volatilities of common shares of comparable publicly traded companies. We will continue to apply this process to grants made as a public company until a sufficient amount
of historical information regarding the volatility of our own stock price becomes available
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Risk-free interest rate
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Yields of long-dated Swiss government zero coupon bond issues
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Expected dividends
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Zero percent as dividends have not been paid
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Forfeiture rates
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Historical and expected forfeiture data
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Historically, for all periods prior to the initial public offering (IPO), the fair value of the common shares underlying our share-based awards was estimated on each grant date by our management and approved by our
board of directors. In order to determine the fair value of our common shares underlying option grants, our board of directors considered, among other things, the breadth of our product candidate portfolio, the stages of development of our various
product candidates and major changes to stage of development, the progress and additions to our collaboration agreements, risks inherent in our activities, the lack of liquidity of our Company’s securities, and the valuations and sentiment toward
biotech companies. Given the absence of a public trading market for our common shares, our board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair value
of our common shares, including our stage of development, progress of our research and development efforts, the strength of our consolidated balance sheets and capital base, equity market conditions affecting comparable public companies, and the
lack of liquidity of our common shares.
Restricted share units
We estimate the fair value of restricted share units using a reasonable estimate of market value of the common shares on the date of the award. We classify our share-based payments as equity-classified awards as they
are settled in our common shares. We measure equity-classified awards at their grant date fair value and do not subsequently re-measure them. Compensation costs related to equity-classified awards are equal to the fair value of the award at grant
date amortized over the vesting period of the award using the graded method. We reclassify that portion of vested awards to share premium as the awards vested.
Right-of-use assets and lease liabilities
Effective January 1, 2019, the Company adopted IFRS 16 Leases, which provides a new model for lessee accounting in which all leases, other than short-term
and low-value leases, are accounted for by the recognition on the consolidated balance sheet of a right-of-use asset and a lease liability, and the subsequent amortization of the right-of-use asset over the earlier of the end of the useful life or
the lease term. The Company applied the modified retrospective approach, which required the recognition of the cumulative effect of initially applying IFRS 16 as of January 1, 2019 to accumulated losses and not restating previous years. As the
Company recognized the right-of-use assets at the amount equal to the lease liabilities there was no impact to accumulated losses. In accordance with IFRS 16, the Company (i) does not recognize right-of-use assets and lease liabilities for leases
of low value (i.e. approximate fair value of USD 5,000). For a complete discussion of accounting, see “Note 5. Right-of-use assets and lease liabilities.”
In-process research and development (IPR&D) asset
The Company’s acquired IPR&D asset is stated at cost less any impairments. Our IPR&D asset is subject to impairment testing at least annually or when there are indications that the carrying
value may not be recoverable until the completion of the development process. At that point, the capitalized amounts are amortized over their estimated useful life. The determination of the recoverable amounts include key estimates which are highly
sensitive to, and depend upon, key assumptions.
The Company will not capitalize future development costs in respect to this IPR&D asset until they meet the criteria for capitalization of research and development costs in accordance with IAS
38 Intangible Assets.
Results of operations
The Covid-19 global pandemic has impacted various countries in which AC Immune currently operates clinical trials and business operations. The extent to which Covid-19 may impact us will depend on future
developments, which are currently uncertain and cannot be predicted with confidence, such as the duration of the outbreak, the severity of Covid-19, or the effectiveness of actions to contain and treat Covid-19.
The Company continues to effect its business continuity plan and adapt as the situation evolves. Currently, we have resumed normal operations at full capacity, with minimal disruption to our business. We are
continuously assessing and adapting our working practices and business operations to ensure compliance with official guidance and orders related to the pandemic and are working proactively with our partners and other stakeholders to take steps
intended to mitigate and minimize any negative impact to our research, clinical programs and other business operations.
The Company does not currently have or project material impacts to the ongoing key trials. Additionally, the Company has drug supplies that are expected to be sufficient to complete ongoing trials as well as
additional drug substance supplies expected to be sufficient to support ongoing cohorts of clinical trials for a period of at least three to six months. The Company will refrain from starting new clinical trials if a minimum of a six-month supply
on hand cannot be secured. Finally, the Company currently does not expect delays to its clinical trials due to manufacturing or supply-chain issues.
Financial operations overview
Contract Revenue
Given our stage of development, we have not generated any revenue from product sales. Our contract revenues to date have been derived primarily from separate license and collaboration agreements on some of our product
candidates in various stages of preclinical and clinical development.
Our contract revenues have experienced fluctuations over the past three years as a result of securing new collaboration agreements, the timing of milestone achievement and the size of each milestone payment. We expect
that any revenue we generate from our collaboration agreements with each of Lilly, Genentech, Janssen and LMI and/or from any other current or future collaboration partners will fluctuate from year to year as a result of the timing and amount of
milestones and other payments.
Research and development expenses
Research and development costs are expensed as incurred, and consist of salaries and benefits, laboratory supplies, materials, intellectual property, facility and information technology (IT) costs,
as well as fees paid to other non-employees and entities that conduct certain research and development activities on our behalf and all other allocated expenses. Amounts incurred in connection with license and collaboration agreements are also
included in research and development expense. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until those goods or services are received.
Clinical trial costs are a component of research and development expenses. We accrue and expense clinical trial activities performed by third parties based upon actual work completed in accordance
with agreements established with clinical CROs and clinical sites. We determine the actual costs through monitoring patient enrollment and discussions with internal personnel and external service providers as to the progress or stage of completion
of trials or services and the agreed-upon fee to be paid for such services.
Manufacturing start-up costs are a component of research and development expenses. Additionally, manufacturing costs incurred after regulatory approval but in connection with significant changes
and/or enhancements to the approved manufacturing process are recorded as research and development expenses. We accrue and expense the manufacturing activities performed by third parties based upon actual work completed in accordance with
agreements established with contract manufacturers.
Our investment in research and development activities, including the clinical development of our product candidates has historically been and is projected to be more than 75% of our total annual operating costs.
Research and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates, as well as development of new product candidates from our SupraAntigen and Morphomer platforms and the
development of product candidates pursuant to our collaboration agreements with Lilly, Genentech, Janssen and LMI. We recognize all research and development costs as they are incurred. Clinical study costs, contract manufacturing and other
development costs incurred by third parties are expensed as the contracted work is performed. At present, most of our research activities comprise three major areas:
|
• |
focused non-AD NDD including Parkinson’s disease, ALS and NeuroOrphan indications; and
|
We expect our research and development expenses to increase substantially in the future and expect to fund a broader number of projects, which will impact our research strategy in four key ways:
(i) we expect to undertake later-stage research and development of our product candidates and, if approved, to take some of those product candidates into commercialization;
(ii) we will allocate more funding to existing programs to advance the development of these programs;
(iii) we will increase our research and development efforts on non-AD indications including NeuroOrphans and diagnostics; and
(iv) we will initiate a number of new research initiatives that are complementary to our existing and planned research initiatives.
We expect that our total future research and development costs will increase over current levels in line with our three-pillar strategy that focuses on (i) AD, (ii) focused non-AD NDD
including Parkinson’s disease, ALS and NeuroOrphan indications and (iii) diagnostics.
General and administrative expenses
General and administrative expenses include personnel costs, expenses for outside professional services and all other allocated expenses. Personnel costs consist of salaries, cash bonuses, benefits and share-based
compensation. Outside professional services consist of legal, accounting and audit services, IT and other consulting fees. Allocated expenses consist of certain IT, facilities and depreciation expenses. We continue to incur additional expenses as a
result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, and those of any national securities exchange on which our securities are traded (Nasdaq), additional insurance expenses,
investor relations activities and other administrative and professional services.
Other operating income/(expense)
Other operating income/(expense) consists primarily of income associated with foundation grants such as those from the MJFF or Target ALS.
Finance Result, net
Financial income and expenses include bank fees associated with charges levied by banks on foreign payments, interest income and expense associated with our cash balances and interest
expense associated with lease liabilities. For the year ended December 31, 2021, we recognized a gain on the change in fair value of derivative financial assets associated with two convertible notes sold to certain Affiris affiliated
entities that did not occur in the comparable prior periods. For the year ended December 31, 2019, we recorded a gain on the conversion feature of the convertible loan due to Lilly, incurred effective interest to
amortize the host debt for this convertible loan and accrued interest for a financing obligation.
Exchange differences consist of foreign exchange transactions and re-measurement gains and losses that arise from our cash being held in currency other than Swiss Francs, certain collaboration agreements such as the
collaboration agreements with Genentech and LMI being denominated in currencies other than Swiss Francs, and selected purchases, which we effect in foreign currencies.
Taxation
AC Immune is subject to corporate Swiss federal, cantonal and communal taxation, respectively, in Switzerland, Canton of Vaud, Commune of Ecublens, near Lausanne. We are also subject
to taxation in other jurisdictions in which we operate, in particular, the United States where our wholly-owned subsidiary is incorporated.
We are entitled under Swiss laws to carry forward any losses incurred for a period of 7 years and can offset our losses carried forward against future taxes. As of December 31, 2021, we had tax loss carry-forwards
totaling CHF 197.2 million. There is no certainty that we will make sufficient profits to be able to utilize these tax loss carry-forwards in full.
The effective corporate income tax rate (federal, cantonal and communal) where we are domiciled is currently 13.606%.
As of January 1, 2020, the Company may request for 2020 and future tax years a tax relief of 60%, which would be applied to income from patents and similar rights at the communal and cantonal levels. This relief would
first require the reintegration of all expensed and deducted research and development costs related to the concerned patents and similar rights for consideration in our taxable results from the prior ten years. The Company has not currently made
any decision to enter this patent box system. Additionally, a “super-deduction” may be granted for payroll and other expenses of research and development of Swiss origins.
However, the aforementioned tax relief based on the patent box and deductions for research and development may not exceed 50% of the overall taxable profit before these tax relief and deductions.
Notwithstanding the corporate income tax, the corporate capital is taxed at a rate of 0.1305% (cantonal and communal tax only, as there is no federal tax on capital).
Value added tax (VAT) is charged on all qualifying goods and services supplied by VAT-registered businesses. Rates vary based on category, but the Company applies a standard rate of 7.7% on the value of the goods or
services to all sales invoices, which is payable to the Swiss tax authorities. Similarly, VAT paid on purchase invoices is reclaimable from the Swiss tax authorities.
Results of operations
The numbers below have been derived from our audited consolidated financial statements included elsewhere in this Annual Report. The discussion below should be read along with these consolidated financial statements
and it is qualified in its entirety by reference to them.
Comparison of the years ended December 31, 2021 and 2020
Contract revenue
For the year ended December 31, 2021, AC Immune generated no contract revenues compared with CHF 15.4 million for the comparable period in 2020. This represents a decrease of CHF 15.4 million. The following table
summarizes our contract revenues during the years ended December 31, 2021 and 2020:
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Our contract revenues experience fluctuations as a result of securing new collaboration agreements, the timing of milestone achievements and the size of each milestone payment. For
the year ended December 31, 2021, the decrease of CHF 15.4 million in contract revenues compared to the year ended December 31, 2020 is predominantly related to:
|
• |
a decrease of CHF 14.3 million in our agreement with Lilly. The Company recognized a CHF 10 million milestone as well as CHF 4.3 million for R&D activities in 2020; and
|
|
• |
a decrease of CHF 1.1 million in our collaboration with Janssen.
|
Research and development expenses
Research and development activities are essential to our business and represent the majority of our costs incurred. Costs for certain development activities, such as clinical trials, are recognized
based on an evaluation of the progress to completion of specific tasks using information from the clinical sites and our vendors. Our collaboration arrangements have different arrangements to share costs for the development of our product
candidates.
We have completed our R&D spending in both of our Genentech collaborations. We and Janssen are co-developing second-generation therapeutic vaccines, ACI-35.030 and JACI-35.054, through Phase
1b/2a completion. AC Immune and Janssen will jointly share research and development costs until the completion of the first Phase 2b (AC Immune’s contribution to the first Phase 2b trial is capped). From Phase 2b and onwards, Janssen will assume
responsibility for the clinical development, manufacturing and commercialization of the vaccines. We also expect to incur additional R&D expenditures associated with the expansion of our Morphomer Tau program into AD and NeuroOrphan
indications.
We also intend to increase our R&D costs associated with the advancement of ACI-7104 in Parkinson’s disease and our ACI-24 vaccine program (i.e. ACI-24 AD and ACI-24 DS) through mid- and
late-stage clinical development.
Finally, we intend to further characterize our other clinical and preclinical candidates. In addition to these arrangements and proprietarily held assets, we expect that our
total future R&D costs will increase over current levels, in line with our three-pillar strategy that focuses on (i) AD, (ii) focused non-AD NDD including Parkinson’s disease, ALS and NeuroOrphan indications and (iii) diagnostics.
The table below provides a breakdown of our research and development costs, including direct research and development costs, manufacturing costs related to research and development and other research and development
costs not allocated directly to programs for the periods covered by this Annual Report. The research and development costs not allocated to specific programs include employment costs, regulatory, QA and intellectual property costs. We do not assign our internal costs, such as salary and benefits, share-based compensation expenses, laboratory supplies, and other direct expenses and infrastructure costs to individual R&D projects, because the
employees within our R&D groups are typically deployed across multiple research and development programs.
For the year ended December 31, 2021, research and development expenses totaled CHF 62.3 million compared with CHF 59.5 million for the comparable period in 2020. This represents an increase of CHF 2.8 million. The following table presents the research and development expenses during the years ended December 31, 2021 and 2020:
Detailed research and development expenditures by major development category
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discovery and preclinical expenses
|
|
|
19,963
|
|
|
|
20,408
|
|
|
|
(445
|
)
|
Clinical expenses
|
|
|
14,872
|
|
|
|
17,124
|
|
|
|
(2,252
|
)
|
Group function expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Direct R&D
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll expenses
|
|
|
16,465
|
|
|
|
14,424
|
|
|
|
2,041
|
|
Share-based compensation
|
|
|
1,528
|
|
|
|
1,276
|
|
|
|
252
|
|
Other non-allocated
|
|
|
|
|
|
|
|
|
|
|
|
|
Total R&D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses1
|
|
|
44,289
|
|
|
|
43,787
|
|
|
|
502
|
|
Salaries and related costs2
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
1Includes depreciation expenses
2Includes share-based compensation
For the year ended December 31, 2021:
Discovery and preclinical expenses decreased CHF 0.4 million, primarily due to:
|
• |
a decrease of CHF 2.0 million for the research of alpha-synuclein antibodies.
|
partially offset by:
|
• |
an increase of CHF 0.7 million for the expansion of our Morphomer Tau program into NeuroOrphan indications and the further characterization of our preclinical candidates, CHF 0.5 million for the optimization and development of our
anti-TDP-43 antibody, CHF 0.1 million for our diagnostic imaging agents and CHF 0.4 million in other discovery programs,
|
Clinical expenses decreased by CHF 2.3 million, primarily due to:
|
• |
a decrease of CHF 2.2 million for Phase 1 activities for our Morphomer Tau compound which completed in 2020, CHF 2.0 million for ACI-24 for DS as a result of prior period scaling up activities for a
Phase 2 clinical trial which were not repeated in the current period and CHF 1.8 million for ACI-24 for AD as the six-month safety period completed,
|
partially offset by:
|
• |
an increase of CHF 3.5 million for ACI-35.030 driven by R&D cost sharing, increased patient enrollment into the Phase 1b/2a study and increased frequency of interim analysis testing and CHF 0.2 million for other clinical programs.
|
The variances in Group function expenses relate to regulatory and quality assurance, intellectual property and other non-allocated costs.
Total salaries and related costs increased by CHF 2.3 million, primarily due to:
|
• |
an increase in salary and benefit related costs of CHF 2.0 million primarily related to the internal reallocation of certain employees’ personnel cost from general and administrative expenses to research and development personnel
expenses in 2021 and the annualization of 2020 hires; and
|
|
• |
higher share-based compensation expense of CHF 0.3 million related predominantly to an increase of stock options issued to employees.
|
The CHF 3.2 million increase in other non-allocated expenses relate to administrative R&D and certain non-allocated functional expenses, primarily due to:
|
• |
an increase of CHF 2.8 million associated with the reallocation of certain IT and facilities expenditures made in 2021 that were not reclassified in the prior period, CHF 0.3 million in depreciation expense and CHF 0.1 million in other
items.
|
General and administrative expenses
General and administrative expenses consist primarily of salaries and related costs, including share-based compensation, professional fees such as legal and accounting related services,
infrastructure expenses, and other operating expenses.
For the year ended December 31, 2021, general and administrative expenses totaled CHF 17.9 million compared with CHF 18.6 million for the comparable period in 2020. This represents
a decrease of CHF 0.7 million. The following table presents the general and administrative expenses during the years ended December 31, 2021 and 2020:
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses1
|
|
|
7,031
|
|
|
|
7,471
|
|
|
|
(440
|
)
|
Salaries and related costs2
|
|
|
|
|
|
|
|
|
|
|
|
|
Total general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
1Includes depreciation expenses
2Includes share-based compensation
For the year ended December 31, 2021, this decrease is primarily due to:
|
• |
CHF 2.8 million associated with the reallocation of certain IT and facilities expenditures made in 2021 that were not reclassified in the prior period,
|
partially offset by:
|
• |
a CHF 1.1 million for transaction costs associated with our asset acquisition for a portfolio of therapeutics targeting alpha-synuclein from Affiris,
|
|
• |
a CHF 0.9 million increase in our directors’ and officers’ insurance for the period; and
|
|
• |
CHF 0.3 million increase in other administrative expenses.
|
Other operating income/(expense)
For the year ended December 31, 2021, other operating income/(expense) totaled CHF 1.2 million in income compared with CHF 1.4 million in income for the comparable period in 2020.
This represents a decrease of CHF 0.2 million. The following table presents the other operating income/(expense) during the years ended December 31, 2021 and 2020:
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating income/(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other operating income/(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2021, this decrease is primarily due to:
|
• |
a decrease of CHF 0.3 million in grant income related to activities completed prior to the start of the current period related to our MJFF awards in 2021,
|
partially offset by;
|
• |
an increase of CHF 0.1 million in grant income for activities completed for our Target ALS Foundation award.
|
Finance result, net
For the year ended December 31, 2021, finance result was a CHF 6.0 million gain compared with a CHF 0.7 million loss for the comparable period in 2020. This represents an increase
of CHF 6.7 million. The following table presents the finance result during the years ended December 31, 2021 and 2020:
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income
|
|
|
6,485
|
|
|
|
78
|
|
|
|
6,407
|
|
Financial expense
|
|
|
(581
|
)
|
|
|
(184
|
)
|
|
|
(397
|
)
|
Exchange differences
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance result, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance result was a gain primarily increased related to:
|
• |
an increase of CHF 6.4 million in financial income, predominantly related to a CHF 6.5 million gain on the change in fair value of derivative financial assets associated with two convertible notes sold to certain Affiris affiliated
entities as a result of fair value remeasurements; and
|
|
• |
a CHF 0.7 million increase in favorable foreign currency exchange differences related to movement in the CHF versus foreign currencies, predominantly the US Dollar and Euro,
|
partially offset by:
|
• |
a CHF 0.4 million increase in financial expense, of which CHF 0.4 million relates to interest expense as many of our CHF-denominated deposit accounts bear negative interest as well as our lease liabilities in
accordance with IFRS 16.
|
Non-IFRS financial measures
In addition to our operating results, as calculated in accordance with IFRS, as adopted by the IASB, we use adjusted income/(loss) and adjusted earnings/(loss) per share when monitoring and evaluating our operational
performance. Adjusted income/(loss) is defined as income/(loss) for the relevant period, as adjusted for certain items that we believe are not indicative of our ongoing operating performance. Adjusted earnings/(loss) per share is defined as
adjusted income/(loss) for the relevant period divided by the weighted-average number of shares for such period.
We believe that these measures assist our shareholders because they enhance the comparability of our results each period and provide more useful insight into operational results for the period. The Company’s executive
management uses these non-IFRS measures to evaluate our operational performance. These non-IFRS financial measures are not meant to be considered alone or as substitutes for our IFRS financial measures, and should be read in conjunction with our
consolidated financial statements prepared in accordance with IFRS. The most directly comparable IFRS measure to these non-IFRS measures is net income/(loss). The following table reconciles net income/(loss) to adjusted income/(loss) and adjusted
earnings/(loss) per share for the periods presented:
Reconciliation of income/(loss) to adjusted income/(loss) and
earnings/(loss) per share to adjusted earnings/(loss) per share
|
|
For the Years Ended
December 31,
|
|
(In CHF thousands, except for share and per share data)
|
|
|
|
|
|
|
|
|
|
Income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash share-based payments1
|
|
|
4,126
|
|
|
|
4,088
|
|
|
|
2,834
|
|
Foreign currency (gains)/losses2
|
|
|
70
|
|
|
|
703
|
|
|
|
826
|
|
Change in fair value of derivative financial assets3
|
|
|
(6,459
|
)
|
|
|
—
|
|
|
|
—
|
|
Transaction costs4
|
|
|
1,144
|
|
|
|
—
|
|
|
|
—
|
|
Effective interest expenses5
|
|
|
—
|
|
|
|
—
|
|
|
|
1,355
|
|
Change in fair value of conversion feature6
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share – basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share – diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to earnings/(loss) per share – basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to earnings/(loss) per share – diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings/(loss) per share – basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings/(loss) per share – diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares used to compute adjusted loss per share – basic
|
|
|
74,951,833
|
|
|
|
71,900,212
|
|
|
|
70,603,611
|
|
Weighted-average number of shares used to compute adjusted loss per share – diluted
|
|
|
74,951,833
|
|
|
|
71,900,212
|
|
|
|
71,103,341
|
|
1Reflects non-cash expenses associated with share-based compensation for equity awards issued to directors, management and employees of the Company. This expense
reflects the awards’ fair value recognized for the portion of the equity award which is vesting over the period.
2Reflects foreign currency re-measurement gains and losses for the period, predominantly impacted by the change in the exchange rate between the US Dollar and the
Swiss Franc.
3Reflects the change in the fair value of the derivative financial instruments associated with two convertible notes sold to certain Affiris affiliated entities.
4Reflects transaction costs associated with our asset acquisition for a portfolio of therapeutics targeting alpha-synuclein.
5Effective interest expense for the period relates to the accretion of the Company’s convertible loan in accordance with the effective interest method.
6Change in fair value of conversion feature that is bifurcated from the convertible loan host debt with Lilly.
Adjustments for the years ended December 31, 2021, 2020 and 2019 increased net loss by CHF 1.1 million, decreased net loss by CHF 4.8 million and increased net income by CHF 0.5
million, respectively. The Company recorded share-based compensation expenses of CHF 4.1 million, CHF 4.1 million and CHF 2.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. There were foreign currency re-measurement
losses of CHF 0.1 million, CHF 0.7 million and CHF 0.8 million for the years ended December 31, 2021, 2020 and 2019, respectively, predominantly related to the cash balance of the Company as a result of fluctuations of the US Dollar against the
Swiss Franc. The Company recognized a CHF 6.5 million gain on the change in fair value of the derivative financial assets associated with two convertible notes sold to certain Affiris affiliated entities in 2021. This gain did not arise
in the comparable prior periods. The Company also incurred CHF 1.1 million in transaction costs associated with its acquisition of a portfolio of therapeutics targeting alpha-synuclein, which did not arise in the comparable prior periods. Finally,
related to the Company’s convertible note settled with Lilly in 2019, we recorded CHF 1.4 million for amortization of effective interest for the year ended December 31, 2019 and recognized a CHF 4.5 million gain
for the change in fair value of the liability related to the conversion feature in 2019. There were no comparable expenses or gains in 2021 nor 2020.
The Company also discloses liquidity, which is defined as a financial indicator comprised of cash and cash equivalents and short-term financial assets. See “Note 3. Summary of
significant accounting policies” to our consolidated financial statements for further definition.
B.
|
Liquidity and capital resources
|
Cash flows
Comparison of the years ended December 31, 2021 and 2020
The following table summarizes our cash flows for the periods indicated:
|
|
For the Years Ended
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
(65,689
|
)
|
|
|
(59,517
|
)
|
|
|
(6,172
|
)
|
Investing activities
|
|
|
(53,664
|
)
|
|
|
28,329
|
|
|
|
(81,993
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
Net cash used in operating activities was CHF 65.7 million for the year ended December 31, 2021 compared with net cash used in operating activities of CHF 59.5 million for the year
ended December 31, 2020. The change in cash used in operating activities for the year ended December 31, 2021 was due to the Company incurring a net loss of CHF 73.0 million for the year ended December 31, 2021 compared with net loss of CHF 61.9
million for the same period in 2020, which was driven by (i) a decrease of CHF 15.4 million in contract revenues, principally due to the recognition of a CHF 10 million milestone payment and CHF 4.3 million for R&D activities associated with
our agreement with Lilly in the prior period, which did not repeat in the current period, (ii) a CHF 2.8 million increase in R&D expenditures for the year ended December 31, 2021 and (iii) a CHF 6.5 million gain on the change in fair
value of derivative financial assets associated with two convertible notes sold to certain Affiris affiliated entities.
Investing activities
Net cash used in investing activities was CHF 53.7 million for the year ended December 31, 2021 compared with net cash provided by investing activities of CHF 28.3 million for the year ended
December 31, 2020. The Company invested in a net of CHF 51.0 million worth of short-term financial assets for the year ended December 31, 2021, compared to a net maturation of CHF 30.0 million of short-term financial assets for the prior period.
Additionally, the Company spent CHF 2.6 million on property, plant and equipment, predominantly to enhance its laboratory and facilities.
Financing activities
Net cash provided by financing activities was CHF 40.7 million for the year ended December 31, 2021, compared with net cash used in financing activities of CHF 0.8 million for the year ended December 31, 2020. The
increase of CHF 41.5 million is predominantly related to (i) CHF 23.5 million received from two convertible notes sold to certain Affiris affiliated entities, (ii) CHF 4.6 million for the issuance of shares as part of the Company’ acquisition
with Affiris for the program portfolio of therapeutics targeting a-syn, notably ACI-7104 (see “Note 6. Asset acquisition.”) and (iii) CHF 12.1 million received from proceeds from the sale of treasury shares in public offerings, net of
underwriting fees and transaction costs.
Operating capital requirements and plan of operations
We do not expect to generate revenues from royalties based on product sales unless and until our partners obtain regulatory approval of, and successfully commercialize, our current
or any future product candidates. As of December 31, 2021, we had cash and cash equivalents of CHF 82.2 million and short-term financial assets of CHF 116.0 million, resulting in CHF 198.2 million of liquidity. The decrease relative to December
31, 2020 was predominantly related to R&D spending on our major discovery and R&D programs, and the strengthening of the Company’s infrastructure, systems and organization. This was offset by the receipt of CHF 23.5 million for two
convertible notes sold to certain Affiris affiliated entities, CHF 4.6 million for the issuance of shares in association with our transaction with Affiris and CHF 12.1 million, net of underwriting fees
and transaction costs, for the sale of 1,171,543 of our common shares that were previously held as treasury shares in accordance with our ATM program. There can be no certainty as to the exact timing of future milestone payments, or in fact,
whether any of these will ever be made, given that they are contingent on clear milestones being reached. Accordingly, assuming that we do not receive potential milestone payments and based upon our currently contemplated R&D strategy, we
believe that our existing capital resources will be sufficient to meet our projected operating requirements through Q1 2024.
We expect to generate losses for the foreseeable future, and these losses could increase as we continue product development until we successfully achieve regulatory approvals for our product
candidates and begin to commercialize any approved products. We are subject to all the risks pertinent to the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors
that may harm our business. We expect to incur additional costs associated with operating a public company and we anticipate that we will need substantial additional funding in connection with our continuing operations. If we need to raise
additional capital to fund our operations and complete our ongoing and planned clinical studies, funding may not be available to us on acceptable terms, or at all.
Our future funding requirements will depend on many factors, including but not limited to the following:
|
• |
The scope, rate of progress, results and cost of our preclinical and clinical studies and other related activities, according to our long-term strategic plan;
|
|
• |
The cost of manufacturing clinical supplies and establishing commercial supplies of our product candidates and any other products we may develop;
|
|
• |
The cost, timing and outcomes of regulatory approvals;
|
|
• |
The costs and timing of establishing sales, marketing and distribution capabilities;
|
|
• |
The terms and timing of any collaborative, licensing and other arrangements that we may establish, including any required milestone and royalty payments thereunder;
|
|
• |
The emergence of competing technologies or other adverse market developments; and
|
|
• |
The potential cost and timing of managing, protecting, defending and enforcing our portfolio of intellectual property.
|
Contractual obligations
In addition, the Company has been a tenant at our current location in the EPFL Innovation Park since shortly after our inception in 2003. We have entered into long-term rental lease agreements with respect to these
facilities. However, our lease agreements are structured such that we can exit these lease agreements without penalty provided we give the owner of our premises sufficient notice. We have capitalized a portion of our lease liabilities in
accordance with IFRS 16. See “Note 5. Right-of-use assets and lease liabilities.”
The Company currently projects CHF 1.0 million in undiscounted short-term lease obligations and CHF 2.4 million in undiscounted long-term lease obligations. Additionally, the Company projects CHF 19.4 million in
short-term purchase commitments and CHF 3.9 million in long-term purchase commitments predominantly driven by R&D activities.
ATM program
Commencing in September 2020, the Company established an “at the market offering” (ATM) for the sale of up to USD 80 (CHF 73.9) million worth of our common shares from time to time by entering into an Open Market
Sale Agreement (Sales Agreement) with Jefferies LLC (Jefferies). In Q2 2021, we filed a new registration statement on Form F-3 and entered into a new Sales Agreement in Q2 2021 to replace and extend the ATM
program. To date, the Company has sold 1,171,543 million common shares previously held as treasury shares pursuant to the new Sales Agreement, raising USD 13.3 (CHF 12.1) million, net of underwriting fees and transaction costs.
Comparison of the years ended December 31, 2020 and 2019
For a discussion of the financial results and condition for the fiscal year ended December 31, 2019, please refer to “Item 5. Operating and financial review and prospects—A. Operating results—comparison of the
years ended December 31, 2020 and 2019” of our Annual Report on Form 20-F for the year ended December 31, 2020 filed on March 23, 2021.
C.
|
Research and development, patents and licenses, etc.
|
See “Item 4. Information on the Company—B. Business overview” and “Item 5. Operating and financial review and prospects—A. Operating results—results of operations.”
See “Item 5. Operating and financial review and prospects.”
E.
|
Critical Accounting Estimates
|
We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. See “Note 3. Summary of significant accounting policies” to our consolidated financial statements for a description of
the most significant accounting policies applied in the preparation of our consolidated financial statements.
ITEM 6.
|
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
A.
|
Directors and senior management
|
Executive Officers, other key employees and board of directors
The following table presents information about our executive officers, other key employees, and directors and director nominees, including their ages, as of March 1, 2022. The term of each of our directors is 1
year and, accordingly, will expire at our 2022 annual shareholder meeting to be held in June 2022.
|
|
|
|
|
|
Initial year of
appointment
|
Executive Officers
|
|
|
|
|
|
|
Andrea Pfeifer, Ph.D.
|
|
Chief Executive Officer and Director
|
|
64
|
|
2003
|
Marie Kosco-Vilbois, Ph.D.
|
|
Chief Scientific Officer
|
|
64
|
|
2019
|
Johannes Rolf Streffer, M.D.
|
|
Chief Medical Officer
|
|
53
|
|
2020
|
Piergiorgio Donati
|
|
Chief Technical Operations Officer
|
|
51
|
|
2019
|
Joerg Hornstein
|
|
Chief Financial Officer
|
|
44
|
|
2017
|
Jean-Fabien Monin
|
|
Chief Administrative Officer
|
|
51
|
|
2009
|
|
|
|
|
|
|
|
Other Key Employees
|
|
|
|
|
|
|
Julien Rongère, Ph.D.
|
|
VP Regulatory Affairs and Quality Assurance
|
|
44
|
|
2017
|
Olivier Sol, M.D.
|
|
VP Head of Clinical Development
|
|
55
|
|
2016
|
Alexandre Caratsch
|
|
General Counsel
|
|
56
|
|
2018
|
Bojana Portmann, Ph.D.
|
|
AVP IP and Business Development
|
|
42
|
|
2011
|
Julian Gray, M.D., Ph.D.
|
|
Clinical Advisor
|
|
64
|
|
2007
|
Mark Danton
|
|
VP Information Systems, Security and Digital Technologies
|
|
58
|
|
2019
|
|
|
|
|
|
|
|
Non-Executive Directors
|
|
|
|
|
|
|
Douglas Williams, Ph.D.
|
|
Chairman and Director
|
|
63
|
|
2018
|
Thomas Graney
|
|
Director
|
|
57
|
|
2016
|
Werner Lanthaler, Ph.D.
|
|
Director
|
|
53
|
|
2018
|
Roy Twyman, M.D.
|
|
Director
|
|
65
|
|
2019
|
Carl June, M.D.
|
|
Director
|
|
67
|
|
2020
|
Alan Colowick, M.D.
|
|
Director
|
|
59
|
|
2021
|
Monika Bütler, Ph.D.
|
|
Director
|
|
60
|
|
2021
|
Monica Shaw, M.D.
|
|
Director
|
|
43
|
|
2021
|
The current business addresses for our executive officers, other key employees, directors and director nominee is AC Immune SA, EPFL Innovation Park, Building B, 1015 Lausanne, Switzerland.
Executive Officers
Andrea Pfeifer, Ph.D., Co-Founder, Chief Executive Officer and Director: Prof. Andrea Pfeifer co-founded AC Immune SA in 2003, successfully leading it to an IPO in 2016,
since when she has served as a Director on the Board. Under her leadership, multiple transformative partnerships have been established with leading pharmaceutical companies, yielding a potential value of up to CHF 3.3 billion plus additional
royalties. Before founding the Company, she was the Head of Nestlé Research Centre in Lausanne, Switzerland where she played a major role in connecting science and business. Whilst at Nestlé she led the scientific development of a number of
highly innovative, critically acclaimed products from laboratory to market, established the microbiome as a major cross-category product development platform and co-founded the Life Science focused Nestlé Venture Capital Fund. Prior to this she
was a Visiting Fellow at the Human Carcinogenesis Branch of The National Institute of Health, Bethesda, USA. She currently serves as the Chair of Investment Fund BioMedInvest, Basel and AB2 Bio SA, Lausanne, and is a member of the Supervisory
Board of Symrise AG, Holzminden, Germany. She is also a key member of the CEOi initiative on Alzheimer’s Disease and the Davos Alzheimer’s Collaborative (DAC).
Prof. Pfeifer holds a Ph.D. in Toxicology (Cancer Research) from the University of Würzburg, Germany and is a registered Toxicologist and Pharmacist. She received her Habilitation from the University of Lausanne,
Switzerland and is an Honorary Professor at the Ecole Polytechnique Fédérale de Lausanne (EPFL).
Marie Kosco-Vilbois, Ph.D., Chief Scientific Officer: A US citizen, Dr. Kosco-Vilbois has
extensive experience in the biopharmaceutical industry and served as Chief Scientific Officer of Novimmune since 2005. Prior to joining Novimmune in 2002, Dr. Kosco-Vilbois was Head of Immunology and Preclinical Pharmacology at the Serono
Pharmaceutical Research Institute, a Senior Scientist and then Head of Immunology at the Glaxo Wellcome Research Institute in Geneva, and a Scientific Member of the Basel Institute for Immunology. During her career, she has taken numerous
biologicals from discovery into preclinical studies and clinical development, most notably filing market applications of a biological for an orphan indication. Dr. Kosco-Vilbois gained her Bachelor’s Degree in Biology from Rutgers University,
New Jersey, US, and a PhD in Anatomy and Immunology from the Medical College of Virginia/Virginia Commonwealth University School of Medicine, US.
Johannes Rolf Streffer, M.D., Chief Medical Officer: Prof. Johannes Streffer joined AC Immune SA in January 2021 as Chief Medical Officer from UCB Biopharma SPRL where
he was VP, Head of Translational Medicine Neuroscience. Prior to this he was a member of the Alzheimer Disease Area Leadership Team at Janssen R&D and the industrial lead for EMIF-AD, where 14 countries are combined to foster
understanding of early biomarkers and change in the predementia AD spectrum. His recognized expertise and standing in the scientific and medical community provide an invaluable asset as we work to develop innovative treatments for
neurodegenerative diseases based on our proprietary technology platforms.
Prof. Streffer graduated from the University of Tübingen, Germany with a medical degree. He completed graduate studies on neuro-oncology and is Board certified in Psychiatry and Neurology. Currently he is a
visiting Professor in the Department of Biomedical Sciences, University of Antwerp.
Piergiorgio Donati, Chief Technical Operations Officer: Mr. Donati joined AC Immune in June 2018 as Director, Global Program Management, having previously worked for AC
Immune from 2011 to 2015 as Head of Manufacturing and Project Management. Between 2015 and 2018, Mr. Donati was Head of CMC program development at Glenmark Pharmaceuticals and Biotech CMC Lead at Merck KGaA. Prior to 2011, he held R&D
positions at Abiogen, Merck Group and Serono. Mr. Donati holds a degree in Analytical Chemistry from the Technical Institute G.L. Bernini.
Joerg Hornstein, Chief Financial Officer: Mr. Hornstein has served as our Chief Financial Officer since April 2017. Prior to joining AC Immune, Mr. Hornstein served as
Senior Vice President Group Controlling for Unternehmensgruppe Theo Müller based in Luxembourg from January 2014 to March 2017. Between 2002 and 2013 he worked for Merck KGaA, a leading science and technology company in healthcare, life science
and performance materials, where he held various senior finance roles. Among other appointments, he was CFO for Merck’s operations in Indonesia and Merck Serono’s operations in China. Furthermore, he served as Vice President Group Controlling
for Merck Group Headquarters in Germany and as Divisional CFO for Merck Millipore in the US. Mr. Hornstein holds an MBA with Distinction from London Business School, UK, and a Bachelor of Business Administration from Baylor University in the
US.
Jean-Fabien Monin, Chief Administrative Officer: Mr. Monin was nominated Chief Administrative Officer in July 2015 following his role as our Chief Financial Officer from
March 2009 to July 2015. Prior to AC Immune, he held several positions during his tenure of 14 years at bioMérieux, a leading international in vitro diagnostics group, culminating in his nomination as
Chief Financial Officer. His last position was CFO of bioMérieux Central Europe based in Vienna, Austria from December 2006 to March 2009. Mr. Monin holds a Masters in Finance and International Business from the University of Paris-Dauphine,
France.
Other key employees
Julien Rongère, Ph.D., VP Regulatory Affairs and Quality Assurance: Dr. Rongère joined AC Immune in July 2017 as Head of European Regulatory Affairs and Quality Assurance.
Prior to joining AC Immune, Dr. Rongère held positions of increasing responsibility at Celgene in Switzerland. Most recently, he served as Director, Regulatory Affairs, leading the development of regulatory strategies for small molecules and
CAR-T cell therapies and contributed to the development and approval of Revlimid in multiple myeloma and mantle cell lymphoma. Prior to Celgene, Dr. Rongère served as a Regulatory Expert at Apoxis, SA in Switzerland. During his career, Dr.
Rongère gained specific expertise in the development of regulatory strategies for taking products from Phase 1 through to commercialization in the field of hematology/oncology and immunology/inflammation, including fast-to-market approaches,
orphan drugs and pediatric development. Dr. Rongère gained his Master’s Degree in Medical Genetics from the University of Aberdeen, UK, and holds a Ph.D. in Molecular Biology from the University of Lausanne, Switzerland.
Oliver Sol, M.D., VP Head of Clinical Development: Prior to joining AC Immune, Dr. Olivier Sol was Clinical Director of Exonhit (Paris) and thereafter Medical &
Regulatory Affairs Director for Diaxonhit, where he was responsible for the development and medical validation of in vitro diagnostic products in cancer,
infectious diseases and Alzheimer’s disease. Dr. Sol spent his over 20-year career as a Medical Expert in several therapeutic areas with a strong focus on central nervous system diseases, within pharmaceutical companies as Janssen, UCB-Pharma,
GlaxoSmithKline and Sanofi. He contributed to the clinical development of currently marketed drugs in epilepsy (topiramate and levetiracetam) and galantamine in Alzheimer’s disease. He has also gained significant experience in the field of
biological biomarkers. Dr. Sol holds an M.D. from the Paris-Sud University (Paris-Saclay) with a specialization in Medical Biology.
Alexandre Caratsch, General Counsel: Alexandre Caratsch is a Swiss-qualified attorney with 30 years’ experience in private practice, multinational companies and in ventures.
He initially worked as an in-house lawyer for E&Y and the SGS Group before specializing in healthcare, holding senior legal positions at Novartis and Medtronic. Before joining AC Immune, he led the Corporate Legal Affairs and Intellectual
Property group for Medtronic’s Europe, Middle East and Africa (EMEA) region. Mr. Caratsch has also co-founded two start-up companies in the field of information technology and medical technology, respectively, and has supported other start-up
companies with strategic, transactional and general counsel. Mr. Caratsch holds a Master’s degree in Law from the University of Neuchâtel, Switzerland and is admitted to the Bar of Geneva, Switzerland.
Bojana Portmann, Ph.D., AVP IP and Business Development: Dr. Portmann joined AC Immune in 2011 as Intellectual Property Manager and has held multiple roles within the IP
department with increasing responsibility over the past years, during which her work was mainly focused on creating and strengthening patent portfolios for biologicals, small molecules and liposomal technology. Dr. Portmann holds a Ph.D. degree
from the EPFL University in Switzerland, and a LL.M. degree, Master of Intellectual Property Law and Management (MIPLM), from the CEIPI in France. She also received a M.Sc. (Dipl. Ing.) degree in Polymer and Chemical Engineering from the
University of Belgrade in Serbia.
Julian Gray, M.D., Ph.D., Clinical Advisor: Dr. Gray has served as Clinical Advisor to our programs in neurodegenerative diseases since January 2007 and works in this
function exclusively for AC Immune. He has previously held the position of Head of CNS Therapeutics at Eisai Ltd in London leading the global development of early and late-stage CNS projects in Alzheimer’s disease, Parkinson’s disease and other
CNS areas. Prior to this he served as Head of Alzheimer Clinical Research at Hoffmann-La Roche in Basel where he conducted large-scale clinical trials in the US and Europe. After his studies he was Medical Expert at Sandoz Pharmaceuticals in
Basel undertaking clinical studies of different compounds in dementia and Parkinson’s disease. Dr. Gray holds the title of a Specialist in Pharmaceutical Medicine (Switzerland). He received his medical degree (MBBS) from the University of
London, a B.A. and Ph.D. from the University of Oxford and an MBA from Oxford Brookes University.
Mark Danton, VP Information Systems, Security and Digital Technologies: Mr. Mark Danton is a globally recognized and experienced executive in Information Systems/Information
Technology (IS/IT) with extensive experience in developing, launching and managing business-relevant IS, cybersecurity and digital technology solutions and services.
Prior to joining AC Immune, Mr. Danton served as IS/IT Global Manager at Nestlé and held a number of global roles at BT Global Services and in Dimension Data PLC. Mr. Danton holds an Executive MBA from the Business
School Lausanne, graduating cum laude and as the Executive MBA Student of the Year.
Non-Executive Directors
Douglas Williams, Ph.D., Chairman and Director: Douglas E. Williams, Ph.D., is currently the President, CEO and member of the Board of Directors of Codiak BioSciences. He was
previously Biogen’s Executive Vice President, Research and Development, serving in this role from January 2011 to July 2015. He joined Biogen from ZymoGenetics, where he was most recently CEO and member of the Board of Directors. ZymoGenetics
was purchased for $985 million by Bristol Myers Squibb during Dr. Williams’ tenure. Previously, he held leadership positions within the biotechnology industry, including Chief Scientific Officer and Executive Vice President of Research and
Development at Seattle Genetics, and Senior Vice President and Washington Site Leader at Amgen. Dr. Williams served in a series of scientific and senior leadership positions over a decade at Immunex, including Executive Vice President and Chief
Technology Officer and a member of the Board of Directors. During his 30+ year career in the biotechnology industry he has played a role in the development of several novel drugs including Enbrel, Tecfidera, and Spinraza. He has served on the
board of numerous biotechnology companies and is currently Chairman of the Board of AC Immune, and is a Director for Panacea II and a Director for private companies CytoImmune Therapeutics and Xenikos.
Thomas Graney, Director: Thomas Graney is currently the CEO, CFO, and member of the Board of Directors of Oxurion NV. Prior to Oxurion, he was CFO of Generation Bio, Senior
Vice President and CFO at Vertex Pharmaceuticals Inc. and CFO and SVP of Finance & Corporate Strategy at Ironwood Pharmaceuticals. Prior to Ironwood Pharmaceuticals, Mr. Graney spent 20 years working with J&J and its affiliates, serving
for 4 years as worldwide VP of Finance and CFO of Ethicon. Mr. Graney has extensive global experience that spans corporate development, commercial strategy, portfolio management and supply chain management, communication, and investor
relations. Mr. Graney is currently on the Board of Directors of Mogrify LTD and Chairman of the Audit Committee. A Chartered Financial Analyst charterholder, Mr. Graney holds a B.S. in accounting from the University of Delaware and an MBA in
Marketing, Finance and International Business from the Leonard N. Stern School of Business at New York University.
Werner Lanthaler, Ph.D., Director: Dr. Werner Lanthaler is the CEO of Evotec AG, a drug discovery alliance and development partnership company focused on rapidly progressing
innovative product approaches with leading pharmaceutical and biotechnology companies, academics, patient advocacy groups and venture capitalists. Since joining Evotec in 2009, Dr. Lanthaler has focused the company on collaborating with biotech
and pharma companies and academia, supporting biotech innovation. He previously served as Chief Financial Officer at Intercell AG where he played a key role in many of that company’s major milestones. During his tenure, Intercell undertook an
IPO and developed from a venture-backed biotechnology company into a global vaccine player. Dr. Lanthaler has also served as Director of the Federation of Austrian Industry, and from 1995 to 1998 was a Senior Management Consultant at McKinsey
& Company. Dr. Lanthaler is a Non-Executive Member of the Board of Directors of arGEN-X and is a member of the Supervisory Board of Topas Therapeutics GmbH. He holds a Doctorate in Economics from Vienna University, a Master’s degree in
Business Administration from Harvard University, and a degree in Psychology.
Roy Twyman, M.D., Director: Dr. Twyman is a Neurologist and is founder and current CEO of Amron Neuroscience, LLC, a private consulting company focused on neuroscience drug
development. Prior to this, Dr. Twyman spent almost 20 years at Janssen Research & Development, LLC (a Johnson & Johnson company) and was a member of the Neuroscience Therapeutic Area Leadership team responsible for clinical R&D and
strategic planning of CNS neurology and psychiatry pipeline products. From 2012 to March 2018, Dr. Twyman was a Senior Vice President in the Neuroscience Therapeutic Area overseeing the Alzheimer’s Disease Area. He currently participates as an
independent Board Member or as a Scientific Advisory Board Member for a number of small biotech or pharmaceutical companies.
Carl June, M.D., Director: Prof. June is Richard W. Vague Professor in Immunotherapy, Director of the Center for Cellular Immunotherapies and Director of the Parker
Institute for Cancer Immunotherapy at the Perelman School of Medicine at the University of Pennsylvania. Due to his lifelong work on lymphocyte activation, Prof. June is considered a world authority on mechanisms related to immune tolerance and
adoptive immunotherapy in the fields of chronic inflammation and cancer. He and his team pioneered the groundbreaking work in immunotherapy in which patients with refractory and relapsed chronic lymphocytic leukemia are treated with genetically
engineered versions of their own T cells. This CAR-T therapy approach, which trains the immune system to attack and destroy cancer cells, has opened a new era of innovative treatments and personalized medicine for cancer patients.
Prof. June is a graduate of the Naval Academy in Annapolis, USA, and Baylor College of Medicine in Houston, USA, where he received his medical degree. Prof. June also completed graduate training in immunology and
malaria with Dr. Paul-Henri Lambert at the World Health Organization, Geneva, Switzerland, and post-doctoral training in transplantation biology with E. Donnell Thomas and John Hansen at the Fred Hutchinson Cancer Research Center in Seattle,
USA. He has published more than 500 manuscripts and is the recipient of numerous honors and prizes.
Alan Colowick, M.D., Director: Dr. Alan Colowick is currently a Managing Director at Matrix Capital Management and has served in executive and Board roles for numerous large
and emerging biotech companies. From 2017 until January 2021, he was a Partner at Sofinnova, where he led investments for several clinical-stage companies. Previously, Dr. Colowick was Executive Vice President and served in various leadership
roles at Celgene Corporation, including President for Celgene’s EMEA regions and Senior Vice President of Global Medical Affairs. Before Celgene, he was the Chief Executive Officer at Gloucester Pharmaceuticals, Inc. which was acquired by
Celgene in 2010. Dr. Colowick also served as the President of Oncology at Geron Corporation, as Chief Medical Officer of Threshold Pharmaceuticals, and in numerous positions of increasing responsibility at Amgen culminating with his role as VP,
Medical Affairs Europe.
Dr. Colowick serves on the Board of Directors for several biopharma companies, and his prior roles as Chairman include VelosBio (sold to Merck in 2020 for $2.75 billion) and Principia Biopharma (sold to Sanofi in
2020 for $3.7 billion). He received his medical degree from Stanford University, a Master’s in Public Health from Harvard University, and a B.S. in Molecular Biology from the University of Colorado. He completed specialty training in
Hematology-Oncology at Harvard Medical School, the Dana Farber Cancer Institute, and Brigham and Women’s Hospital in Boston, USA.
Monika Bütler, Ph.D., Director: Dr. Monika Bütler is a leading Swiss economist and former Vice President of the independent Swiss Covid-19 Science Taskforce. She is a member
of the Board of Directors and of the audit committees of both Schindler Holding AG and Huber & Suhner AG. Dr. Bütler is also a member of the Swiss National Bank’s Council, where she serves on the remuneration committee. Her international
economic expertise is in public policy and managerial economics, including an advisory role to the World Bank and visiting appointments in the U.S., Australia and Europe. Dr. Bütler is a Vice President of the Foundation Board of the Gebert Rüf
Foundation, a science and innovation foundation that supports entrepreneurial projects which are committed to achieving an impact.
Prof. Bütler holds a Ph.D. in Economics from the University of St. Gallen, a Doctorate Honoris Causa from the University of Lucerne, and a Diploma in Mathematics/Physics from the University of Zurich.
Monica Shaw, M.D., Director: Dr. Monica Shaw is a pharmaceutical industry expert who has held senior leadership positions and was
involved in advancing more than 15 therapeutic products from first-in-man studies through regulatory approvals and commercialization across multiple geographies. She also played key business development roles in company acquisition and
integration and co-development partnerships. Through her work, Dr. Shaw gained extensive specialty experience in the fields of dermatology, immuno-inflammation, HIV, neurology and oncology.
Currently, she is Executive Vice President Head Region Europe, Canada, Australia for Leo Pharma. She has previously held other broad leadership roles, at other leading pharmaceutical companies, including as
Vice-President Commercial Head Asia Pacific region at GSK/ViiV Healthcare, and Medical Director and Chief Scientific Officer UK for Novartis, in addition to previous leadership positions at Norgine, Shire and Merck KGaA.
Monica Shaw holds an M.D. from the University of Oxford Medical School and is a Member of the Royal College of Physicians.
Family Relationships
None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Compensation of directors and executive officers
For the year ended December 31, 2021, the aggregate compensation accrued or paid to the members of our board of directors and our executive officers for services in all capacities was CHF 8.5 million.
During the year ended December 31, 2021, the total fair value of stock options granted to directors and executive officers was CHF 3.7 million.
The amount set aside or accrued by us to provide pension, retirement or similar benefits to members of our board of directors and executive officers amounted to a total of CHF 0.3 million in the year ended December
31, 2021.
We incorporate by reference into this Annual Report the information in “Item 1. C—2020 Board Compensation” and “Item 2. C—2020 Executive Compensation” of Exhibit 99.3 to our report on Form 6-K filed with the SEC on
March 22, 2022.
Equity incentive plans
In 2016, we ceased issuing new grants under our prior equity incentive plans, which we refer to as the Prior Plans, and adopted a new omnibus equity incentive plan under which we have the discretion to grant a
broad range of equity-based awards to eligible participants.
Prior plan: C1
Since our inception in 2003, we have had four separate Prior Plans under which stock options were granted (Prior Plans A, B and C2 have terminated): Options granted under Plan C1 from 2013 through the adoption of
the current 2016 Stock Option and Incentive Plan (SOIP) were taxed upon exercise instead of at grant due to a change in taxation rules.
Plan administration. Under Plan C1, an option, which can only be granted with the approval of our board of directors, is evidenced by an option agreement signed by the
participant to indicate his or her acceptance of the option and is subject to the terms and conditions of the applicable Prior Plan.
Eligibility. Under Plan C1, options were granted to our directors, employees, advisors and agents.
Options exercise price. The exercise price of all options issued under the Prior Plan is CHF 0.15.
Vesting period. Under Plan C1, the options vesting period was 4 years with 25% of the options vesting each year.
Expiration period. The expiry dates for each plan are as follows:
Plan C1: 10 years
Amendment. Our board of directors has the authority to amend each of the Prior Plans.
2016 SOIP
At the November 15, 2016 AGM of the Company, our board of directors approved the 2016 SOIP (as amended and restated the “2016 SOIP”). The maximum number of shares available for issuance under the 2016 SOIP is
3,228,886 common shares. The shares available for issuance under the 2016 SOIP were initially registered with the SEC on a Form S-8 on March 8, 2017, and additional shares were registered on a Form S-8 on August 5, 2019. As of December 31,
2021, there were a total of 1,613,242 shares underlying options that were exercisable and 3,585,689 shares underlying outstanding options and 797 shares underlying outstanding restricted share units issued from both our Prior Plans and the 2016
SOIP.
Plan Administration. The 2016 SOIP is administered by either our board of directors or the compensation committee, or a similar committee performing the functions of the
compensation committee. Approval of the plan administrator is required for all grants of awards under the 2016 SOIP, but the administrator may delegate to our CEO the authority to grant awards, subject to certain limitations set forth on the
plan.
Awards. Awards may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted share units, restricted share
awards, unrestricted share awards, performance share awards and dividend equivalent rights.
Eligibility. Under the 2016 SOIP, full or part-time officers and other employees, non-employee directors and consultants of the Company and its subsidiaries who are
selected by the administrator are eligible to participate in the plan.
Options exercise price. Under the 2016 SOIP, the option exercise price is determined by the plan administrator at the time of grant, but will not be less than fair market
value (as defined in the 2016 SOIP) on the grant date, and for incentive stock options granted to any employee who is a 10 percent owner in the Company, will not be less than 110 percent of the fair market value on the grant date.
Vesting period. Vesting conditions are determined by the administrator at the time of grant and are specified in the applicable award certificate.
Accelerated vesting. The administrator may accelerate the exercisability or vesting of all or any portion of any award in circumstances involving the grantee’s death,
disability, retirement or termination of employment, or a change in control.
Amendment. Our board of directors has the authority to amend the 2016 SOIP.
Amendment and restatement to the 2016 SOIP
In June 2019, the Board authorized, and the shareholders approved, an increase in the maximum number of shares reserved for issuance under the 2016 SOIP. In October 2019, the Board authorized a second amendment and
restatement to the 2016 SOIP. These amendments were made to align certain elements with Swiss statutory requirements and had no financial impact for the Company in 2021 or 2020.
Equity compensation
For the fiscal year ended December 31, 2021, the Company has granted our directors and executive officers, in the aggregate, options for the right to acquire 718,472 shares at exercise prices ranging from USD 5.31
to USD 7.72 per share, which vest either over a 1 year, 3 year or 4 year period with vesting to occur quarterly or annually depending on the nature of the award. The expiration date for these options granted in 2021 is 2031. The Company did not
grant restricted share units to its directors and executive officers in 2021, 2020 or 2019. Previous restricted share units granted to directors vested over a 1 year period. Restricted share units granted to executives have a 4 year vesting
life with vesting to occur quarterly. Please see “Note 18. Share-based compensation” for further detail.
Composition of board of directors
Our board of directors is composed of nine directors. Each director is elected for a 1-year term, no later than the next Annual General Meeting (AGM). The current members of our board of directors were appointed at
shareholders’ meetings held on June 25, 2021 and October 29, 2021 to serve until the 2022 AGM to be held in June 2022.
We are a foreign private issuer. As a result, in accordance with the Nasdaq stock exchange listing requirements, we rely on home country governance requirements and certain exemptions thereunder rather than relying
on the stock exchange corporate governance requirements. For an overview of our corporate governance principles, see “Item 16G. Corporate governance.”
Board meetings
Our Board of Directors met in accordance with their respective mandate both physically (as was practicable under current pandemic circumstances), by video-conference and telephonically throughout 2021. The Board
members analyzed the scientific, business, financial, organizational and legal risks of the Company based on the external factors and internal changes that could potentially impact the risks for the Company in the future.
Director independence
As a foreign private issuer, under the listing requirements and rules of Nasdaq, we are not required to have independent directors on our board of directors, except to the extent that our audit and finance
committee is required to comply with independence requirements, subject to certain phase-in schedules. However, our board of directors has determined that, under current listing requirements and rules of Nasdaq (which we are not subject to) and
considering any applicable committee independence standards, Douglas Williams, Thomas Graney, Werner Lanthaler, Roy Twyman, Carl June, Alan Colowick, Monika Bütler and Monica Shaw are “independent directors.” In making such determination, our
board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances our board of directors deemed relevant in determining the director’s independence, including the number of common
shares beneficially owned by the director and his or her affiliated entities, if any.
Committees of the board of directors
Our board of directors established two separate committees: an audit and finance committee and a compensation, nomination and corporate governance committee.
Audit and finance committee
The audit and finance committee, which consists of Monika Bütler (Chair), Thomas Graney, and Werner Lanthaler, assists our board of directors in overseeing our accounting and financial reporting processes and the
audits of our consolidated financial statements. In addition, the audit and finance committee is directly responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm.
The audit and finance committee consists exclusively of members of our board who are financially literate, and Monika Bütler, Thomas Graney and Werner Lanthaler are considered to be “audit committee financial experts” as defined by the SEC. Our
board of directors has determined that Monika Bütler, Thomas Graney and Werner Lanthaler satisfy the “independence” requirements set forth in Rule 10A-3 under the Exchange Act.
The audit and finance committee is governed by a charter that complies with Nasdaq rules. The audit and finance committee has the responsibility to, among other things:
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• |
review and assess the qualifications, independence, performance and effectiveness of the independent auditor;
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review the scope of the prospective audit by the independent auditor, the estimated fees, and any other matters pertaining to the audit;
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• |
approve any audit and non-audit services proposed to be provided by the independent auditor to ensure independent auditor independence;
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review and assess the independent auditor’s report and management letters and take notice of all comments of the independent auditor on accounting procedures and systems of control, and review the independent auditor’s reports with
management;
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• |
be responsible for the resolution of disagreements between the management and the independent auditor;
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• |
review and evaluate the lead audit partner of the independent audit team and confirm and evaluate their rotation;
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• |
review and discuss all (i) consolidated financial statements, (ii) reports intended for publication and (iii) any other financial statements intended for publication to consider significant financial reporting issues and judgments
made in connection with the preparation of our consolidated financial statements, including any significant changes in our selection or application of accounting principles;
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approve the quarterly condensed consolidated financial statements;
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review with the management, personnel responsible for the design and implementation of the internal audit function, and the independent auditor in separate meetings any analysis or other written communication prepared by the
management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the consolidated financial statements, including critical accounting policies, the
effect of regulatory and accounting initiatives, and off-balance sheet transactions and structures on our consolidated financial statements;
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review in cooperation with the independent auditor and the management whether the accounting principles applied are appropriate in view of our size and complexity;
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periodically review our policies and procedures for risk management and assess the effectiveness thereof, including discussing with management our major financial risk exposures and the steps that have been taken to monitor and
control such exposure;
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discuss with management and external advisors any legal matters that may have a material impact on our consolidated financial statements and any material reports or inquiries from regulatory or governmental agencies that could
materially impact our contingent liabilities and risks;
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review our disclosure controls and procedures and internal control over financial reporting, including significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting;
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establish procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters; and
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review and approve or ratify any related-person transaction in accordance with our related-person transaction policy.
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The audit and finance committee will meet as often as it determines is appropriate to carry out its responsibilities, but in any event will meet at least four times per year.
Compensation, nomination and corporate governance committee
The compensation, nomination and corporate governance committee, consists of Douglas Williams (Chair), Roy Twyman and Thomas Graney.
The compensation, nomination and corporate governance committee is governed by a charter that complies with SEC and home country governance rules. The compensation, nomination and corporate governance committee has
the responsibility to, among other things:
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recommend to the board the guidelines for the overall compensation and equity awards for the board of directors and executive officers along with the rationale for such recommendations;
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recommend to the board the compensation of executive officers;
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propose the maximum total compensation of the board of directors and executive officers for approval at the Annual General Meeting;
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periodically review policies and principles for the Company’s corporate governance;
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establish the process for assessment of the performance of members of the board, its committees and individual members;
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prepare and reviews the Company’s succession plan for members of the board and the executive committee;
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periodically review the Company’s code of conduct and recommends changes as needed;
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recommend for presentation to our shareholders the compensation report for shareholder vote; and
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define guidelines for the selection of candidates for election or re-election as members of the board and our executive officers.
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Swiss law requires that we adopt a compensation committee, so in accordance with Nasdaq Listing Rule 5615(a)(3), we will follow home country requirements with respect to the compensation, nomination and corporate
governance committee. As a result, our practice will vary from the requirements of Nasdaq Listing Rule 5605(d), which sets forth certain requirements as to the responsibilities, composition and independence of compensation committees, and from
the independent director oversight of director nomination requirements of Nasdaq Listing Rule 5605(e). We will be subject to the Swiss Ordinance Against Executive Compensation (Say on Pay) Rule. In addition, this committee will also be
responsible for director and board committee nominations as well as reviewing and amending, if required, our corporate governance framework and guidelines.
As of December 31, 2021, we employed 143 employees, 26 of whom were part-time employees. 73 of our employees hold Ph.D. degrees and 51 hold M.Sc. degrees. Our 143 employees are from more than 25 countries. The
average number of employees (calculated on full-time equivalents) in 2021 was 139. As of December 31, 2020 and 2019 we had 149 and 132 employees, respectively. We have never had a work stoppage, and none of our employees is represented by a
labor organization or under any collective-bargaining arrangements. We consider our employee relations to be good.
See “Item 7. Major shareholders and related-party transactions—A. Major shareholders.”
ITEM 7.
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MAJOR SHAREHOLDERS AND RELATED-PARTY TRANSACTIONS
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The following table presents information relating to the beneficial ownership of our common shares as of the date of this Annual Report by:
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each person, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding common shares;
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each of our executive officers and directors; and
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all executive officers and directors as a group.
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The number of common shares beneficially owned by each entity, person, executive officer or director is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any common shares over which the individual has sole or shared voting power or investment power as well as any common shares that the individual has the
right to acquire within 60 days of March 1, 2022 through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and
investment power with respect to all common shares held by that person.
The percentage of outstanding common shares is computed on the basis of 83,479,013 common shares outstanding as of March 1, 2022. Common shares that a person has the right to acquire within 60 days of March 1, 2022
are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the
percentage ownership of all executive officers and directors as a group. Unless otherwise indicated below, the address for each beneficial owner is AC Immune, EPFL Innovation Park, Building B, 1015 Lausanne, Switzerland.
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Shares
beneficially
owned (%)
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5% Shareholders
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dievini Hopp BioTech holding GmbH & Co KG1
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18,041,000
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21.6
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%
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Varuma AG2
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11,999,999
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14.4
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%
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Affiris AG3
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10,133,474
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12.1
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%
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Biotechnology Value Fund (BVF) Inc.4
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7,062,379
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8.5
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%
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Executive Officers and Directors
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Andrea Pfeifer5
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2,684,105
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3.2
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%
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Marie Kosco-Vilbois6
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*
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*
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Johannes Rolf Streffer7
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*
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*
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Piergiorgio Donati8
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*
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*
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Joerg Hornstein9
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*
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*
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Jean-Fabien Monin10
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*
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*
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Douglas Williams11
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*
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*
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Thomas Graney12
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*
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*
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Werner Lanthaler13
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*
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*
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Roy Twyman14
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*
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*
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Carl June15
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*
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*
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Alan Colowick16
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*
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*
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|
Monika Bütler17
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*
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*
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Monica Shaw18
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*
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*
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All executive officers and directors as a group (14 persons)
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3,878,722
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4.6
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%
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* Indicates beneficial ownership of less than 1% of the total issued and outstanding common shares.
1Represents 18,041,000 shares held by dievini Hopp BioTech holding GmbH & Co KG. Dietmar Hopp controls the voting and investment decisions of the ultimate
parent company of dievini Hopp BioTech holding GmbH & Co KG. The address for dievini Hopp BioTech holding GmbH & Co KG is Johann-Jakob-Astor Str. 57, 69190 Walldorf, Germany.
2Represents 11,999,999 shares held by Varuma AG set forth in a Schedule 13G/A filed with the SEC on February 12, 2019. The address for Varuma AG is
Aeschenvorstadt 55, CH-4051 Basel, Switzerland. Rudolf Maag controls the voting and investment decisions of Varuma AG.
3Based on information set forth in a Schedule 13G filed with the SEC by Affiris on August 5, 2021, (i) these shares
consist of 7,106,840 shares held of record by Affiris AG, as well as 1,513,317 shares that were issuable upon the conversion of notes held by Santo Venture Capital GmbH and 1,513,317 shares that were issuable upon the conversion of notes held
by FCPB Affi GmbH; and (iii) the address of Affiris AG is Karl-Farkas-Gasse 22, 1030 Vienna, Austria, the address of by Santo Venture Capital GmbH is Bergfeldstrasse 9, 83607 Holzkirchen, Germany and the address of FCPB Affi GmbH is Freihamer
Strasse 2, 82166 Gräfelfing, Germany. The convertible notes held by Santo Venture Capital GmbH and FCPB Affi GmbH were fully settled in Q4 2021.
4 Based on information set forth in a Schedule 13G filed with the SEC by BVF on February 14, 2022, these shares consist of
7,062,379 shares held of record by BVF Inc. The address of BVF Inc. is 44 Montgomery St., 40th
Floor, San Francisco, California 94104.
5Consists of 2,320,555 of our common shares and options to purchase 363,550 of our common shares exercisable within 60 days of March 1, 2022.
6Consists of 64,365 of our common shares and options to purchase 47,897 of our common shares exercisable within 60 days of March 1, 2022.
7Consists of 14,200 of our common shares and options to purchase 17,789 of our common shares exercisable within 60 days of March 1, 2022.
8Consists of 4,500 of our common shares and options to purchase 54,267 of our common shares exercisable within 60 days of March 1, 2022.
9Consists of 0 of our common shares and options to purchase 429,216 of our common shares exercisable within 60 days of March 1, 2022.
10Consists of 292,942 of our common shares and options to purchase 48,591 of our common shares exercisable within 60 days of March 1, 2022.
11Consists of 12,818 of our common shares and options to purchase 42,819 of our common shares exercisable within 60 days of March 1, 2022.
12Consists of 15,851 of our common shares and options to purchase 34,464 of our common shares exercisable within 60 days of March 1, 2022.
13Consists of 11,906 of our common shares and options to purchase 34,464 of our common shares exercisable within 60 days of March 1, 2022.
14Consists of 0 of our common shares and options to purchase 46,585 of our common shares exercisable within 60 days of March 1, 2022.
15Consists of 0 of our common shares and options to purchase 18,742 of our common shares exercisable within 60 days of March 1, 2022.
16Consists of 0 of our common shares and options to purchase 3,471 of our common shares exercisable within 60 days of March 1, 2022.
17Dr. Bütler holds neither common shares nor non-vested equity instruments exercisable within 60 days of March 1, 2022.
18Dr. Shaw holds neither common shares nor non-vested equity instruments exercisable within 60 days of March 1, 2022.
Holders
As of March 1, 2022, we had approximately 242 shareholders of record of our common shares. The actual number of stockholders is greater than this number of record holders and includes
stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust or by other entities.
Significant changes in ownership by major shareholders
We have experienced significant changes in the percentage ownership held by major shareholders as a result of our IPO. Prior to our IPO in September 2016, our principal shareholders were dievini Hopp BioTech
holding GmbH & Co KG and Varuma AG, which held shares representing 36.5% and 23.1% prior to our IPO, respectively. As of March 1, 2022, dievini Hopp BioTech holding GmbH & Co KG and Varuma AG held 21.6% and 14.4% of our common shares,
respectively. BVF Inc. decreased its holdings from 10.9% to 8.5% of our outstanding common shares. With the closing of our acquisition of the program portfolio of therapeutics targeting alpha-synuclein
(a-syn), notably PD01, from Affiris, Affiris, Santo Venture Capital GmbH and FCPB GmbH became major shareholders, collectively owning 12.1% of our outstanding common shares.
In July 2018, we completed three offerings of our common shares. In these offerings, we issued and sold 10,000,000 common shares, including 1,108,695 sold to the underwriters pursuant to the underwriters’
over-allotment option. The percentage ownership held by certain shareholders decreased as a result of the issuance of the common shares sold by us in these offerings.
In September 2016, we completed our IPO and listed our common shares on the Nasdaq Global Market. In the IPO, we issued and sold 6,900,000 common shares, including 900,000 common shares sold to the underwriters
pursuant to the underwriters’ over-allotment option. While none of our existing shareholders sold common shares in the IPO, the percentage ownership held by certain shareholders decreased as a result of the issuance of the common shares sold by
us in the IPO.
B.
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Related-party transactions
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None.
Indemnification of directors and executive management
Our Articles of Association require us to indemnify our executive officers and directors to the fullest extent permitted by law. We entered into indemnification agreements with our executive officers and
directors.
C.
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Interests of experts and counsel
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Not applicable.
ITEM 8.
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FINANCIAL INFORMATION
|
A.
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Consolidated statements and other financial information
|
Financial statements
See “Item 18. Financial statements,” which contains our consolidated financial statements prepared in accordance with IFRS.
Legal proceedings
From time to time we may become involved in legal proceedings that arise in the ordinary course of business. As of the date of this Annual Report, we have not been a party to or paid any damages in connection with
litigation that has had a material adverse effect on our financial position. No assurance can be given that future litigation will not have a material adverse effect on our financial position. When appropriate in the executive management’s
estimation, we may record reserves in our consolidated financial statements for pending litigation and other claims.
Dividends and dividend policy
We have never declared or distributed dividends on our capital stock. We intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our
business and we do not anticipate distributing any dividends in the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our board of directors.
Under Swiss law, any dividend must be approved by our shareholders. In addition, our auditors must confirm that the dividend proposal of our board of directors conforms to Swiss statutory law
and our articles of incorporation. A Swiss corporation may pay dividends only if it has sufficient distributable profits brought forward from the previous business years (report des bénéfices) or if it
has distributable reserves (réserves à libre disposition), each as evidenced by its audited standalone statutory balance sheet prepared pursuant to Swiss law and after allocations to reserves required by
Swiss law and its articles of association have been deducted. Distributable reserves are generally booked either as “free reserves” (réserves libres) or as “reserve from capital contributions” (apports de capita”). Distributions out of nominal share capital, which is the aggregate nominal value of a corporation’s issued shares, may be made only by way of a share capital reduction.
A discussion of the significant changes in our business can be found under “Item 4. Information on the Company—A. History and development of the Company” and “Item 4. Information on the Company—B. Business
overview.”
ITEM 9.
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THE OFFER AND LISTING
|
A.
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Offering and listing details
|
See “Item 9–C. Markets” below.
Not applicable.
Our common shares trade on the Nasdaq Global Market under the symbol “ACIU.”
Not applicable.
Not applicable.
Not applicable.
ITEM 10.
|
ADDITIONAL INFORMATION
|
Not applicable.
B.
|
Memorandum and articles of association
|
Please see the Articles of Association of AC Immune SA (Exhibit 3.1 to this Form 20-F).
Except as otherwise disclosed in this Annual Report on Form 20-F (including the Exhibits), we are not currently, and have not been in the past 2 years, party to any material contract, other than contracts entered
into in the ordinary course of business.
There are no Swiss governmental laws, decrees or regulations that restrict, in a manner material to us, the export or import of capital, including any foreign exchange controls, or that generally affect the
remittance of dividends or other payments to non-residents or non-citizens of Switzerland who hold our common shares.
The following summary contains a description of the material Swiss and US federal income tax consequences of the acquisition, ownership and disposition of common shares, but it does not purport to be a
comprehensive description of all the tax considerations that may be relevant to a decision to purchase common shares. The summary is based upon the tax laws of Switzerland and regulations thereunder and on the tax laws of the US and regulations
thereunder as of the date hereof, which are subject to change.
Swiss tax considerations
This summary of material Swiss tax consequences is based on Swiss law and regulations and the practice of the Swiss tax administration as in effect on the date hereof, all of which are subject to change (or subject
to changes in interpretation), possibly with retroactive effect. The summary does not purport to consider the specific circumstances of any particular shareholder or potential investor and does not relate to persons in the business of buying
and selling common shares or other securities. The summary is not intended to be, and should not be interpreted as, legal or tax advice to any particular potential shareholder, and no representation with respect to the tax consequences to any
particular shareholder is made.
Current and prospective shareholders are advised to consult their own tax advisors in light of their particular circumstances as to the Swiss tax laws, regulations and regulatory practices that could be relevant to
them in connection with the acquiring, owning and selling or otherwise disposing of common shares and receiving dividends and similar cash or in-kind distributions on common shares (including dividends on liquidation proceeds and stock
dividends) or distributions on common shares based upon a capital reduction (remboursements de la valeur nominale) or reserves paid out of capital contributions (réserves
sur les apports en capital) and the consequences thereof under the tax laws, regulations and regulatory practices of Switzerland.
Taxation of AC Immune
AC Immune is subject to corporate Swiss federal, cantonal and communal taxation in Switzerland, Canton of Vaud, Commune of Ecublens, near Lausanne, respectively.
We are entitled under Swiss laws to carry forward any losses incurred for a period of 7 years and can offset our losses carried forward against future taxes. As of December 31, 2021, we had tax loss carry-forwards
totaling CHF 197.2 million. There is no certainty that we will make sufficient profits to be able to utilize these tax loss carry-forwards in full.
The effective corporate income tax rate (federal, cantonal and communal) where we are domiciled is currently 13.606%.
As of January 1, 2020, the Company may request a tax relief of 60%, which would be applied to income from patents and similar rights at communal and cantonal levels. Additionally, a so-called “super-deduction” may
be granted for payroll and other expenses of research and development of Swiss origins.
However, the aforementioned tax relief based on the patent box and deductions for research and development may not exceed 50% of the overall taxable profit before these tax relief and deductions.
Notwithstanding the corporate income tax, the corporate capital is taxed at a rate of 0.1305% (cantonal and communal tax only, as there is no federal tax on capital). As of January 1, 2020 the capital attributable
to patents and similar rights is considered with 50% relief in the capital tax calculation.
Federal, cantonal and communal individual income tax and corporate income tax
Non-resident shareholders
Except as described in “—Swiss federal withholding tax” below, shareholders who are not resident in Switzerland for tax purposes, and who, during the relevant taxation year,
have not engaged in a trade or business carried on through a permanent establishment or fixed place of business situated in Switzerland for tax purposes (all such shareholders for purposes of this section termed, “Non-resident shareholders”),
will not be subject to any Swiss federal, cantonal and communal income tax on dividends and similar cash or in-kind distributions on Shares (including liquidation proceeds and stock dividends) (for the purposes of this section, “dividends”),
distributions based upon a capital reduction (remboursements liés à la réduction de la valeur nominale des actions) and distributions paid out of reserves from capital contributions (apports de capital) on shares, or capital gains realized on the sale or other disposition of shares.
Resident private shareholders
Swiss-resident individuals who hold their shares as private assets are required to include dividends, but not distributions based upon a capital reduction (remboursements liés à la
réduction de la valeur nominale des actions) and distributions paid out of reserves from capital contributions (apports de capital), in their personal income tax return and are subject to Swiss
federal, cantonal and communal income tax on any net taxable income for the relevant taxation period, including the dividends, but not the distributions based upon a capital reduction (remboursements liés à la
réduction de la valeur nominale des actions) and distributions paid out of reserves from capital contributions (apports de capital). Shareholders holding at least 10% of the share capital of the
Company may be able to deduct their taxable dividends at 30% (70% taxable) at the federal level and up to 50% at the cantonal level, depending on their respective cantonal rates, as partial relief from economic double taxation. Capital gains
resulting from the sale or other disposition of shares are, subject to a few exceptions, not subject to Swiss federal, cantonal and communal income tax, and conversely, capital losses are not tax-deductible for resident private shareholders
(the shareholders referred to in this paragraph for the purposes of this section, “Resident private shareholders”). See “Domestic commercial shareholders” below for a summary of the taxation treatment
applicable to Swiss-resident individuals, who, for income tax purposes, are classified as “professional securities dealers” or are otherwise deemed to hold Company shares in their commercial wealth.
Domestic commercial shareholders
Corporate and individual shareholders who are resident in Switzerland for tax purposes, and corporate and individual shareholders who are not resident in Switzerland, and who, in each case, hold their shares as
part of a trade or business carried on in Switzerland, in the case of corporate and individual shareholders not resident in Switzerland, through a permanent establishment or fixed place of business situated, for tax purposes, in Switzerland,
are required to recognize dividends, distributions based upon a capital reduction (remboursements liés à la réduction de la valeur nominale des actions) and distributions paid out of reserves from
capital contributions (apports de capital) received on shares and capital gains or losses realized on the sale or other disposition of shares in their income statement for the relevant taxation period
and are subject to Swiss federal, cantonal and communal individual or corporate income tax, as the case may be, on any net taxable earnings for such taxation period. The same taxation treatment also applies to Swiss-resident private individuals
who, for income tax purposes, are classified as “professional securities dealers” for reasons of, inter alia, frequent dealing, or leveraged investments, in shares and other securities (the shareholders
referred to in this paragraph for purposes of this section, “Domestic commercial shareholders”). Domestic commercial shareholders who are corporate taxpayers may be eligible for tax relief (réduction pour
participations) in respect of dividends and distributions based upon a capital reduction (remboursements liés à la réduction de la valeur nominale des actions) and distributions paid out of
reserves from capital contributions (apports de capital), as well as capital gains on sales of shares, if the Shares held by them as part of a Swiss business have an aggregate market value of at least
CHF 1 million or represent 10% or more of the outstanding share capital of the Company (in the case of capital gains, if the shares have been held for at least one year).
Swiss cantonal and communal private wealth tax and capital tax
Non-resident shareholders
Non-resident shareholders are not subject to Swiss cantonal and communal private wealth tax or capital tax.
Resident private shareholders and domestic commercial shareholders
Resident private shareholders and domestic commercial shareholders who are individuals are required to report their shares as part of their private wealth or their Swiss business assets, as the case may be, and
will be subject to Swiss cantonal and communal private wealth tax on any net taxable wealth (including shares), in the case of domestic commercial shareholders to the extent the aggregate taxable wealth is allocable to Switzerland. Domestic
commercial shareholders who are corporate taxpayers are subject to Swiss cantonal and communal capital tax on taxable capital to the extent the aggregate taxable capital is allocable to Switzerland.
Swiss federal withholding tax
Dividends that the Company pays on the shares are subject to Swiss Federal withholding tax (impôt anticipé) at a rate of 35% on the gross amount of the dividend. The
Company is required to withhold the Swiss federal withholding tax from the dividend and remit it to the Swiss Federal Tax Administration. Distributions based upon a capital reduction (remboursements liés à la
réduction de la valeur nominale des actions) and distributions paid out of reserves from contributions (apports de capital) are not subject to Swiss federal withholding tax.
The Swiss federal withholding tax on a dividend will be refundable in full to a resident private shareholder and to a domestic commercial shareholder, who, in each case, inter
alia, as a condition to a refund, duly reports the dividend in his individual income tax return as income or recognizes the dividend in his income statement as earnings, as applicable.
A Non-resident shareholder may be entitled to a partial or full refund, as the case may be, of the Swiss federal withholding tax on a dividend if the country of his or her residence for tax purposes has entered
into a bilateral treaty for the avoidance of double taxation with Switzerland and the conditions of such treaty are met. Such shareholders should be aware that the procedures for claiming treaty benefits (and the time required for obtaining a
refund) might differ from country to country. For example, a shareholder who is a resident of the US for the purposes of the bilateral tax treaty between the US and Switzerland is eligible for a partial refund of the amount of the withholding
tax in excess of the 15% treaty rate, provided such shareholder: (i) qualifies for benefits under this treaty and qualifies as beneficial owner of the dividends; (ii) holds, directly or indirectly, less than 10% of the voting stock of the
Company; (iii) does not qualify as a pension scheme or retirement arrangement for the purpose of the bilateral treaty; and (iv) does not conduct business through a permanent establishment or fixed base in Switzerland to which the shares are
attributable. Such an eligible US shareholder may apply for a refund of the amount of the withholding tax in excess of the 15% treaty rate. The applicable refund request form may be filed with the Swiss Federal Tax Administration following
receipt of the dividend and the relevant deduction certificate, however no later than 31 December of the third year following the calendar year in which the dividend was payable.
Swiss federal stamp taxes
The Company will be subject to and pay to the Swiss Federal Tax Administration a 1% Swiss federal issuance stamp duty (droit de timbre d’émissions) on the consideration
received for the issuance of the shares less certain costs incurred in connection with the issuance. The issuance and delivery of the shares to the initial shareholders at the offering price is not subject to Swiss federal securities transfer
stamp duty (droit de timbre de négociation).
Any subsequent dealings in the shares, for which a bank or another securities dealer in Switzerland, as defined in the Swiss Federal Stamp Tax Act, acts as an intermediary, or is a party, to the transaction, are,
subject to certain exemptions provided for in the Swiss Federal Stamp Tax Act, subject to Swiss securities transfer stamp duty tax at an aggregate tax rate of up to 0.15% of the consideration paid for such shares.
Additional tax considerations associated with our ATM program
As of December 31, 2021, the Company held in total 6,221,617 fully paid-in treasury shares as part of its ATM offerings. These shares were established via two tranches (one in September 2020 and one in September
2021, respectively). Under present Swiss tax laws, repurchases of shares for the purposes of cancellation are treated as a partial liquidation and are subject to 35% Swiss withholding tax on the difference between the repurchase price and the
nominal value of the shares except, since January 1, 2011, to the extent attributable to reserves from capital contributions (apports de capital) if any, and to the extent that the repurchase of shares
is out of retained earnings or other taxable reserves. No partial liquidation treatment applies and no withholding tax is triggered if the shares are not repurchased for cancellation but held by the Company as treasury shares, provided the
limitations imposed by corporate law are respected (the nominal value of such shares does not exceed 10% of the outstanding share capital and the purchase price is covered by freely disposable equity). However, regarding the above-mentioned
6,221,617 treasury shares and given the specificities of the ATM offering, the Company sought and obtained a tax ruling from the Swiss Federal Tax Administration confirming that their acquisition by the Company did not constitute a direct
partial liquidation and therefore does not trigger withholding tax. Further, the Company has obtained a tax ruling from the concerned Cantonal Tax Authority at its place of incorporation, to obtain confirmation that the placement of these
treasury shares for a subscription price superior to their nominal value will not trigger any corporate income tax for the Company, provided it occurs within 12 months from the issuance of the shares. The Company sold 1,171,543 shares in 2021
within that deadline.
Of the remaining treasury shares, 2,600,000 shares have been reserved by the board of directors for use only under the Company’s current Stock Option and Incentive Plan per a further tax ruling with the concerned
Cantonal Tax Authority without corporate income tax consequences for the Company. 1,228,457 shares are no longer insulated from corporate taxation and the difference between their nominal value and their sale price will be subject to corporate
income tax upon sale. 2,393,160 fully paid in treasury shares were issued as part of second tranche for the ATM for future subscription (or, possibly, as part of a future share-dividend program, should the Company become profitable and have
enough earnings carried forward to cover such distribution). None of those shares have been sold and are subsequently recorded as treasury shares as of December 31, 2021. They are covered by the same above-mentioned tax rulings (i.e. their
acquisition does not trigger any withholding tax and their placement will not trigger any corporate income tax provided it occurs within 12 months from their issuance).
Material US federal income tax considerations for US Holders
The following is a description of material US federal income tax consequences to the US Holders described below of owning and disposing of our common shares. It does not describe all tax considerations that may be
relevant to a particular person’s decision to own common shares.
This discussion applies only to a US Holder that holds common shares as capital assets for US federal income tax purposes. In addition, it does not describe all of the US federal income tax consequences that may be
relevant in light of a US Holder’s particular circumstances, including alternative minimum tax consequences, the potential application of the provisions of the Code known as the Medicare contribution tax and tax consequences applicable to US
Holders subject to special rules, such as:
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certain financial institutions;
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dealers or traders in securities that use a mark-to-market method of tax accounting;
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persons holding common shares as part of a hedging transaction, straddle, wash sale, conversion transaction or other integrated transaction or persons entering into a constructive sale with respect to the common shares;
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US Holders whose functional currency for US federal income tax purposes is not the US dollar;
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entities classified as partnerships for US federal income tax purposes;
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tax-exempt entities, “individual retirement accounts” or “Roth IRAs;”
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persons that received their common shares as compensation;
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persons that own or are deemed to own 10% or more of our shares, by vote or value; and
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persons holding common shares in connection with a trade or business conducted outside of the US.
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If an entity that is classified as a partnership for US federal income tax purposes holds common shares, the US federal income tax treatment of a partner will generally depend on the status of the partner and the
activities of the partnership. Partnerships holding common shares and partners in such partnerships should consult their tax advisors as to the particular US federal income tax consequences of owning and disposing of the common shares.
This discussion is based on the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, and the income tax treaty between Switzerland and the US (the “Treaty”)
all as of the date hereof, any of which is subject to change or differing interpretations, possibly with retroactive effect.
A “US Holder” is a person that, for US federal income tax purposes, is a beneficial owner of common shares, is eligible for the benefits of the Treaty and is any of the following:
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a citizen or individual resident of the US;
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a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the US, any state therein or the District of Columbia; and
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an estate or trust the income of which is subject to US federal income taxation regardless of its source.
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US Holders should be aware that the Company has determined that it was likely a passive foreign investment company (a “PFIC”) for 2019 and 2020. See “—Passive foreign investment
company rules” below. US Holders should consult their tax advisors concerning the US federal, state, local and non-US tax consequences of owning and disposing of common shares in their particular circumstances, including the
consequences to them under the PFIC rules discussed below.
Taxation of distributions
The following discussion is subject to the discussion in “—Passive foreign investment company rules” below.
As discussed above under “Dividends and dividend policy,” we do not currently expect to make distributions on our common shares. In the event that we do make distributions of cash or other property, distributions
paid on common shares, other than certain pro rata distributions of common shares, will generally be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under US federal income tax
principles). Because we do not maintain calculations of our earnings and profits under US federal income tax principles, we expect that distributions generally will be reported to US Holders as dividends. For so long as our common shares are
listed on Nasdaq (or if we are eligible for the benefits under the Treaty), dividends paid to certain non-corporate US Holders will be eligible for taxation as “qualified dividend income” and therefore, subject to applicable limitations, will
be taxable at rates not in excess of the long-term capital gain rate applicable to such US Holder.
US Holders should consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particular circumstances.
Dividends will be treated as foreign-source dividend income to US Holders and will not be eligible for the dividends-received deduction generally available to US corporations under the Code. Dividends will be
included in a US Holder’s income on the date of the US Holder’s receipt of the dividend. The amount of any dividend income paid in Swiss Francs will be the US dollar amount calculated by reference to the exchange rate in effect on the date of
actual or constructive receipt, regardless of whether the payment is in fact converted into US dollars at that time. If the dividend is converted into US dollars on the date of receipt, a US Holder should not be required to recognize foreign
currency gain or loss in respect of the dividend income. A US Holder may have foreign currency gain or loss if the dividend is converted into US dollars after the date of receipt.
The amount of dividend income will include any amounts withheld by us in respect of Swiss income taxes. Subject to applicable limitations, some of which vary depending upon the US Holder’s particular circumstances,
Swiss income taxes withheld from dividends on common shares at a rate not exceeding the rate provided by the Treaty will be creditable against the US Holder’s US federal income tax liability. The rules governing foreign tax credits are complex
and US Holders should consult their tax advisors regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, US Holders may, at their election, deduct foreign taxes, including any
Swiss income tax, in computing their taxable income, subject to generally applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.
Sale or other disposition of common shares
The following discussion is subject to the discussion in “—Passive foreign investment company rules” below.
Gain or loss realized on the sale or other disposition of common shares will be capital gain or loss, and will be long-term capital gain or loss if the US Holder owned the common shares for more than one year. The
amount of the gain or loss will equal the difference between the US Holder’s tax basis in the common shares disposed of and the amount realized on the disposition, in each case as determined in US dollars. This gain or loss will generally be
US-source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to various limitations.
Passive foreign investment company rules
Under the Code, we will be a PFIC for any taxable year in which, after the application of certain look-through rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of passive
income (the “income test”) or (ii) 50% or more of the average value of our assets (generally determined on a quarterly basis) consists of assets that produce, or are held for the production of, passive income (the “asset test”). Passive income
generally includes dividends, interest, certain non-active rents and royalties, and gains from financial investments. For purposes of the above calculations, we will be treated as if we hold our proportionate share of the assets of, and
directly receive our proportionate share of the income of, any other corporation in which we directly or indirectly own at least 25%, by value, of the shares of such corporation.
Although the application of the income test to a company like us (whose overall losses from research and development activities significantly exceed its gross income) is not entirely clear, we will be a PFIC for
any taxable year under the income test if 75% or more of our gross income (as determined for U.S. federal income tax purposes) for such year consists of interest and other passive income. Prior to the commercialization and sales of any of our
product candidates, our gross income may consist primarily of upfront or milestone payments (which we believe are active income), grants (which are likely to be treated as active income) and interest (which is passive income). The receipt of
upfront payments is non-recurring in nature, and the receipt of grants or milestone payments is subject to various conditions. Therefore, there can be no assurance as to the amount of grants, milestone payments or upfront payments (if any) that
we will receive for any taxable year. Moreover, we may earn income from sublicensing, which may be passive unless certain conditions are satisfied. There is no assurance that the IRS will not challenge the classification of any of our income
items for PFIC purposes for any taxable year. Accordingly, there is no assurance that we will not be a PFIC for any taxable year under the income test.
In addition, we currently hold, and expect to continue to hold, a substantial amount of passive assets, including cash. The average value of our assets (including goodwill) may
be determined, in large part, by reference to our market capitalization, which has fluctuated substantially over time and may continue to be volatile. Due to the volatility of our market capitalization, we may be a PFIC under the
asset test for any taxable year if our cash and other passive assets constitute 50% or more of the value of our total assets (including goodwill).
As discussed in our Annual Reports on Form 20-F for 2019 and 2020, we were likely a PFIC for our taxable years of 2019 and 2020. If we were a PFIC for 2019 or 2020, we will generally continue to be treated as a
PFIC with respect to a US Holder that owned our common shares during any portion of such years, even if we are not a PFIC for 2021 or any other taxable year, unless the US Holder makes a “deemed sale” election with respect to our common shares.
Under a deemed sale election, the US Holder will be deemed to have sold such common shares at their fair market value and any gain recognized on such deemed sale will be treated as an “excess distribution,” as described below. As a result of
this election, the US Holder will have additional basis (to the extent of any gain recognized in the deemed sale) and, solely for purposes of the PFIC rules, a new holding period in the common shares. US Holders are urged to consult their tax
advisors regarding the potential application of the deemed sale election rules to their particular circumstances and the advisability of making a deemed sale election in light of the uncertainty regarding our PFIC status for the current or
future taxable years, as described below.
Although we have not obtained independent valuations of our assets for our taxable year of 2021 and thus are not in a position to make a definitive determination as to whether we were a PFIC in 2021, based on the
composition of our income and assets during 2021 and the estimated value of our assets (which is based on our average market capitalization during 2021), we believe that we were not a PFIC for 2021. However, for the reasons discussed above
there can be no assurance that the IRS will agree. Because our PFIC status for 2022 or any future taxable year will depend on the composition of our income and assets and the value of our assets, we cannot express any expectation regarding our
PFIC status for the current or any future taxable year and there is no assurance that we will not be a PFIC for these years.
If a US Holder owns our common shares in any year in which we are a PFIC, subject to the discussion above regarding the deemed sale election and the discussion below regarding the mark-to-market election, any gain
recognized by the US Holder on a sale or other disposition (including certain pledges) of the common shares will be allocated ratably over the US Holder’s holding period for the common shares. The amounts allocated to the taxable year of the
sale or other disposition and to any year before we became a PFIC will be taxed as ordinary income. The amount allocated to any other taxable year will be subject to tax at the highest rate in effect for individuals or corporations, as
appropriate, for that taxable year, and an interest charge will be imposed on the amount of tax allocated to that taxable year. Further, to the extent that distributions received by a US Holder on its common shares during a taxable year exceed
125% of the average of the annual distributions on the common shares received during the preceding three taxable or the US Holder’s holding period, whichever is shorter, the excess distribution will be subject to taxation in the same manner as
gain, described immediately above.
A US Holder can avoid certain of the adverse rules described above by making a mark-to-market election with respect to the common shares, provided that the common shares are “marketable.” Common shares will be
marketable if they are “regularly traded” on a “qualified exchange” or other market within the meaning of applicable Treasury regulations. If a US Holder makes the mark-to-market election, it generally will recognize as ordinary income any
excess of the fair market value of the common shares at the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the common shares over their fair
market value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the mark-to-market election). If a US Holder makes this election, the US Holder’s tax basis in the common shares
will be adjusted to reflect the income or loss amounts recognized. Any gain recognized on the sale or other disposition of common shares in a year in which we are a PFIC will be treated as ordinary income and any loss will be treated as an
ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-to-market election, with any excess treated as capital loss).
We do not intend to provide the information necessary for US Holders to make a “qualified electing fund” election, which if available could materially affect the tax consequences of the ownership and disposition of
our common shares if we are a PFIC for any taxable year. Therefore, US Holders will not be able to make such elections.
In addition, if we are a PFIC or, with respect to particular US Holder, are treated as a PFIC for the taxable year in which we pay a dividend or for the prior taxable year, the preferential dividend rates discussed
above with respect to dividends paid to certain non-corporate US Holders will not apply.
If a US Holder owns common shares during any year in which we are a PFIC, the US Holder generally must file annual reports containing such information as the US Treasury may require on IRS Form 8621 (or any
successor form) with respect to us, generally with the US Holder’s federal income tax return for that year.
US Holders should consult their tax advisors concerning our potential PFIC status and the potential application of the PFIC rules.
Information reporting and backup withholding
Payments of dividends and sales proceeds that are made within the US or through certain US-related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding,
unless (i) the US Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the US Holder provides a correct taxpayer identification number and certifies that they are not subject to backup withholding.
The amount of any backup withholding from a payment to a US Holder will be allowed as a credit against the holder’s US federal income tax liability and may entitle the Holder to a refund, provided that the required
information is furnished in a timely manner to the IRS.
Information with respect to foreign financial assets
Certain US Holders who are individuals (and, under proposed regulations, certain entities) may be required to report information relating to an interest in our common shares, subject to certain exceptions
(including an exception for common shares held in accounts maintained by certain US financial institutions). US Holders should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of
the common shares.
F.
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Dividends and paying agents
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Not applicable.
Not applicable.
We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual
reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports and other information about issuers, such as us, that file electronically with the SEC. The address of
that website is www.sec.gov.
Additionally, pursuant to Swiss law, any shareholder of record has the right to receive a free copy of this Annual Report and to inspect this Annual Report at any time at our registered office in Ecublens, near
Lausanne, Canton of Vaud, Switzerland.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements, and our executive officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements
with the SEC as frequently or as promptly as US companies whose securities are registered under the Exchange Act.
I.
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Subsidiary information
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Not applicable.
ITEM 11.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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The Company’s activities expose it to the following financial risks: market risk (currency and interest rate risk), credit risk and liquidity risk. The Company’s overall
risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance.
Market risk arises from our exposure to fluctuation in currency exchange rates. We are exposed to market risks in the ordinary course of our business, which are principally limited to foreign currency exchange rate
fluctuations and to a lesser degree, interest rate fluctuations.
Market risk
Foreign exchange risk
The Company is exposed to foreign exchange risk arising from currency exposures, primarily with respect to the EUR, USD and to a lesser extent to GBP, DKK and SEK. The currency exposure is not hedged. However, the
Company has the policy of matching its cash holdings to the currency structure of its expenses. As of December 31, 2021, the Company holds almost 79% of its overall cash and cash equivalents balance in CHF with the remainder predominantly in
EUR and USD (see “Note 8. Cash and cash equivalents and financial assets” of the consolidated financial statements). The Company holds almost 91% of its liquidity (cash and cash equivalents plus short-term financial assets) in CHF.
We have a number of collaboration agreements for which the upfront payments, milestone payments and future royalty payments are not denominated in Swiss Francs, our reporting currency. Furthermore, many of our
research and development activities are subcontracted to parties outside of Switzerland and we purchase materials from suppliers outside of Switzerland. As a result, we are exposed to foreign exchange risk. Approximately 39% of our total costs
are incurred in currencies other than the Swiss Franc. Due to the size of some of the income received from collaboration agreements and also the high percentage of our costs indirectly being in foreign currencies, a hypothetical 10% change in
exchange rates relative to the Swiss Franc could have a material impact on our consolidated financial statements.
Interest rate risk
We maintain financial instruments in accordance with our treasury management policy. The primary objectives of our policy are to preserve principal, maintain proper liquidity and meet operating needs. Our financial
assets are subject to interest rate risk and will decrease in value if market interest rates increase. Due to the current negative interest rates in Switzerland and our policy to maintain the majority of our cash and cash equivalents in our
functional currency. However, due to the conservative nature of our investments and relatively short duration, interest rate risk is mitigated. We do not own derivative financial instruments. Accordingly, we do not believe that there is any
material market risk exposure with respect to derivative or other financial instruments.
Credit risk
The Company maintains a formal treasury risk and investment management policy to limit counterparty credit risk. As of December 31, 2021, the Company’s cash and cash equivalents and short-term financial assets are
held with four financial institutions, each with a high credit rating assigned by international credit-rating agencies. The maximum amount of credit risk is the carrying amount of the financial assets. Receivables are fully performing, not past
due and not impaired (see “Note 8. Cash and cash equivalents and financial assets” and “Note 10. Other current receivables”).
Liquidity risk
Inherent in the Company’s business are various risks and uncertainties, including its limited operating history and the high uncertainty that new therapeutic and diagnostic concepts will succeed. AC Immune’s
success may depend in part upon its ability to (i) establish and maintain a strong patent position and protection, (ii) enter into collaborations with partners in the pharmaceutical and biopharmaceutical industries, (iii) acquire and keep key
personnel employed, and (iv) acquire additional capital to support its operations.
The Company’s approach of managing liquidity is to ensure sufficient cash to meet its liabilities when due. Therefore, management closely monitors the cash position on rolling forecasts based on expected cash flow
to enable the Company to finance its operations for at least 18 months.
Based on the Company’s current liquidity position, comprised of cash and cash equivalents and short-term financial assets, the Company is well financed through Q1 2024, excluding any potential milestones
Safe Harbor
See “Forward-looking Statements.”
ITEM 12.
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DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
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Not applicable.
Not applicable.
Not applicable.
D.
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American depositary shares
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Not applicable.
ITEM 13.
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DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
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No matters to report.
B.
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Arrears and delinquencies
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No matters to report.
ITEM 14.
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
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Not applicable.
ITEM 15.
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CONTROLS AND PROCEDURES
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A.
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Disclosure controls and procedures
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As of December 31, 2021, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we performed an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). There are inherent limitations to the effectiveness of any disclosure controls and procedures system, including the
possibility of human error and circumventing or overriding them. Even if effective, disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.
Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in recording, processing, summarizing and reporting on a timely
basis the information required to be included in periodic filings under the Exchange Act and that such information is accumulated and communicated to management, including our Chief Executive and Chief Financial Officers, as appropriate to
allow timely decisions regarding required disclosure.
B.
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Management’s Annual Report on internal control over financial reporting
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Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Our internal
control over financial reporting is supported by written policies and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based upon criteria established in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was effective as of December 31, 2021.
C.
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Attestation report of the registered public accounting firm
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The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers SA, an independent registered public accounting firm. Their
report is included on page F-2. PricewaterhouseCoopers SA is a member of the Chamber of Public Accountants, Lausanne, Switzerland.
D.
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Changes in internal control over financial reporting
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There have been no changes in the Company’s internal control over financial reporting during the year ended December 31, 2021 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
ITEM 16A.
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Audit committee financial experts
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Our board of directors has determined that Monika Bütler, Thomas Graney and Werner Lanthaler are audit committee financial experts, as that term is defined by the SEC, and are independent for the purposes of SEC
and Nasdaq rules.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics, which covers a broad range of matters including the handling of conflicts of interest, compliance issues and other corporate policies such as insider trading
and equal opportunity and non-discrimination standards. Our Code of Business Conduct and Ethics applies to all of our directors, executive officers and employees. We have published our Code of Business Conduct and Ethics on our website, www.acimmune.com. The information contained on our website is not a part of this Annual Report.
ITEM 16C.
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Principal accountant fees and services
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For the Years Ended
December 31,
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Audit fees
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668
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480
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Audit-related fees
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Total fees
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For the year ended December 31, 2021, PwC was the Company’s auditor for the IFRS and statutory accounts. At the ordinary Annual General Meeting on June 25, 2021, the shareholders appointed PwC as the Company’s
auditor for a term of office of 1 year.
Audit fees include fees for audit services primarily related to the integrated audit of (i) our annual consolidated financial
statements and our internal control over financial reporting as required by Section 404(b) of the Sarbanes-Oxley Act of 2002, (ii) the review of our quarterly condensed consolidated financial statements, (iii) comfort letters, consents and
assistance with and review of documents relating to our securities offerings, including our registration statement on Form F-3 related to our follow-on shelf registration in Q2 2021 and (iv) other accounting and financial reporting
consultation billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States).
Audit-related fees consisted of fees billed for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements or for services that were
traditionally performed by the external auditor.
Pre-approval policies and procedures
In accordance with the requirements of the US Sarbanes‑Oxley Act of 2002 and rules issued by the SEC, we review and pre‑approve any services performed by PwC. The procedure requires that all
proposed future engagements of PwC for audit and permitted non‑audit services are submitted to the Audit and Finance Committee for approval prior to the beginning of any such services. In accordance with this policy, all services performed by
and fees paid to PwC in this Item 16C, were approved by the Audit and Finance Committee.
ITEM 16D.
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Exemptions from the listing standards for audit committees
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Not applicable.
ITEM 16E.
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Purchases of equity securities by the issuer and affiliated purchasers
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In 2021, no purchases of our equity securities were made by or on behalf of AC Immune SA or any affiliated purchaser.
ITEM 16F.
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Change in registrant’s certifying accountant
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Not applicable.
ITEM 16G.
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Corporate governance
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Summary of Significant Corporate Governance Differences from Nasdaq Listing Standards
Our common shares are listed on the Nasdaq Global Market. We are therefore required to comply with certain of the Nasdaq’s corporate governance listing standards (Nasdaq Standards). As a foreign private issuer, we
may follow our home country’s corporate governance practices in lieu of certain of the Nasdaq Standards. Our corporate governance practices differ in certain respects from those that US companies must adopt in order to maintain a Nasdaq
listing. A brief, general summary of those differences is provided as follows.
Independent directors
Swiss law does not require that a majority of our board of directors consist of independent directors. Our board of directors therefore may include fewer independent directors than would be required if we were
subject to Nasdaq Listing Rule 5605(b)(1). In addition, we are not subject to Nasdaq Listing Rule 5605(b)(2), which requires that independent directors must regularly have scheduled meetings at which only independent directors are present.
Compensation, nomination and corporate governance committee
As Swiss law requires that we have a compensation, nomination and corporate governance committee, we will follow home country requirements with respect to such committee. As a result, our practice will vary from
the requirements of Nasdaq Listing Rule 5605(d), which sets forth certain requirements as to the responsibilities, composition and independence of compensation, nomination and corporate governance committees.
Quorum requirements
In accordance with Swiss law and generally accepted business practices, our articles of association do not provide quorum requirements generally applicable to general meetings of shareholders. Our practice thus
varies from the requirement of Nasdaq Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding voting stock.
Solicitation of proxies
Our articles of association provide for an independent proxy holder elected by our shareholders, who may represent our shareholders at a general meeting of shareholders, and we must provide shareholders with an
agenda and other relevant documents for the general meeting of shareholders. However, Swiss law does not have a regulatory regime for the solicitation of proxies, and company solicitation of proxies is prohibited for public companies in
Switzerland. Thus, our practice will vary from the requirement of Nasdaq Listing Rule 5620(b), which sets forth certain requirements regarding the solicitation of proxies.
Shareholder approval
We have opted out of shareholder approval requirements for the issuance of securities in connection with certain events such as the acquisition of stock or assets of another company, the establishment of or
amendments to equity-based compensation plans for employees, a change of control of us and certain private placements. To this extent, our practice varies from the requirements of Nasdaq Listing Rule 5635, which generally requires an issuer to
obtain shareholder approval for the issuance of securities in connection with such events.
ITEM 16H.
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Mine safety disclosure
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Not applicable.
ITEM 16I.
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Disclosure regarding foreign jurisdictions that prevent inspections
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Not applicable.
ITEM 17.
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Financial statements
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We have responded to Item 18 in lieu of this item.
ITEM 18.
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Financial statements
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Financial Statements are filed as part of this Annual Report, see page F-1.
(a) The following documents are filed as part of Annual Report on Form 20-F:
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Articles of Association of AC Immune SA
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Research Collaboration and License Agreement between AC Immune SA Corporation and Genentech, Inc. dated November 6, 2006 (incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form F-1 (File No.
333-211714) filed with the SEC on May 31, 2016)
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Amendment to the Research Collaboration and License Agreement between AC Immune SA Corporation and Genentech, Inc. dated May 7, 2015 (incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form
F-1 (File No. 333-211714) filed with the SEC on May 31, 2016)
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Research Collaboration and License Agreement between AC Immune SA Corporation and Genentech, Inc. dated June 15, 2012 (incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-1 (File No.
333-211714) filed with the SEC on May 31, 2016)
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License and Collaboration Agreement between Piramal Imaging Ltd., Piramal Imaging SA and AC Immune SA, dated May 9, 2014 (incorporated herein by reference to Exhibit 10.4 to the Company’s Registration Statement on Form F-1 (File No.
333-211714) filed with the SEC on May 31, 2016)
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License, Development and Commercialization Agreement between Janssen Pharmaceuticals, Inc. and AC Immune SA, dated December 24, 2014 (incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statement on Form
F-1 (File No. 333-211714) filed with the SEC on May 31, 2016)
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Form of Indemnity Agreement (incorporated herein by reference to Exhibit 10.6 to the Company’s Registration Statement on Form F-1 (File No. 333-211714) filed with the SEC on May 31, 2016)
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AC Immune SA 2013 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form F-1 (File No. 333-211714) filed with the SEC on May 31, 2016)
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AC Immune SA 2013 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form F-1, filed with the SEC on May 31, 2016)
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AC Immune SA 2016 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 99.08 to the Company’s Report on Form 6-K, filed with the SEC on October 13, 2016)
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License Agreement between AC Immune SA and Eli Lilly and Company, dated December 11, 2018 (incorporated herein by reference to Exhibit 4.14 to the Amendment No. 1 to the Company’s Annual Report on Form 20-F/A, filed with the SEC on
April 19, 2019)
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Convertible Note Agreement between AC Immune SA and Eli Lilly and Company, dated December 11, 2018 (incorporated herein by reference to Exhibit 4.15 to the Company’s Annual Report on Form 20-F, filed with the SEC on March 21, 2019)
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First Amendment to License Agreement between AC Immune SA and Eli Lilly and Company, dated September 19, 2019 (incorporated herein by reference to Exhibit 10.1 to the Company’s Report on Form 6-K, filed with the SEC on September 20,
2019)
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Second Amendment to License Agreement between AC Immune SA and Eli Lilly and Company, dated March 20, 2020 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 6-K (File No. 001-37891) filed with
the SEC on March 23, 2020)
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Open Market Sale Agreement, dated as of May 5, 2021, between AC Immune SA and Jefferies LLC (incorporated herein by reference to Exhibit 1.1 to the Company’s Current Report on Form 6-K (File No. 001-37891) filed with the SEC on May
5, 2021)
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Asset Purchase and Contribution in Kind Agreement, dated as of July 26, 2021, between AC Immune SA and Affiris AG (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 6-K (File No. 001-37891)
filed with the SEC on August 4, 2021)
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Convertible Note Agreement, dated as of July 26, 2021, between AC Immune SA and Santo Venture GmbH (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 6-K (File No. 001-37891) filed with the SEC
on August 4, 2021)
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Convertible Note Agreement, dated as of July 26, 2021, between AC Immune SA and FCPB Affi GmbH (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 6-K (File No. 001-37891) filed with the SEC on
August 4, 2021)
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Description of Securities
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List of subsidiaries*
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Certification of Andrea Pfeifer pursuant to 17 CFR 240.13a-14(a)
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Certification of Joerg Hornstein pursuant to 17 CFR 240.13a-14(a)
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Certification of Andrea Pfeifer pursuant to 17 CFR 240.13a-14(b) and 18 USC.1350
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Certification of Joerg Hornstein pursuant to 17 CFR 240.13a-14(b) and 18 USC.1350
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Consent of PricewaterhouseCoopers SA
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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(b) Financial Statement Schedules
None.
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
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AC IMMUNE SA
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Date: March 22, 2022
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By:
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/s/ Andrea Pfeifer
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Name:
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Andrea Pfeifer
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Title:
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Chief Executive Officer
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By:
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/s/ Joerg Hornstein
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Name:
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Joerg Hornstein
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Title:
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Chief Financial Officer
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